Customs, Excise and Gold Tribunal - Tamil Nadu
Vivek Alloys Ltd. vs Commissioner Of Central Excise on 2 February, 2000
Equivalent citations: 2000(69)ECC790
ORDER S.L. Peeran, Member (J)
1. This appeal arises from the Order-in-Original No. 24/91 dated 25.3.91 passed by the Additional Collector of Central Excise, Coimbatore confirming duty demand of Rs. 1,64,001.00 and Penalty of Rs. 5,000 on the appellants on the allegation that the appellants had manufactured one 20/5 MT crane and installed the same in their factory for captive consumption without payment of duty and without following Central Excise formalities. Appellants have requested for decision in the case on merits.
2. We have heard Shri M. Kunhi Kannan, learned DR in the matter.
3. The contention of the appellants at the time of investigation was that they had entrusted the work of designing, fabrication and manufacture of crane to one M/s. Ashok Engineering with the condition that the materials for the manufacture will be supplied by them. M/s. Ashok Engineering abandoned the work midway and the work was entrusted to one M/s. S.L. Engineering who completed the work. They contended that the work was carried out by the job worker named above and the work was not carried out by them and therefore, there was no manufacture by them and hence duty cannot be confirmed on them. They contended that both the job workers being independent and the work was carried out on the basis of principal to principal. Therefore, show cause notice should have been issued to them and demand if any confirmed against them. They also relied upon Tribunal judgment including the plea that such activity did not result in the process of manufacture of any goods. However, the Additional Collector did not accept their pleas and confirmed duty demand on them.
4. Shri M. Kunhi Kannan, learned DR pointed out that the appellants were supplying raw materials to the job workers and the job workers were only hired labourers and they cannot be considered as having carried out the activity of manufacture of the crane independently. Therefore, duty demand is justified. He further pointed out that the crane is not immovable property and it was goods and this position has been upheld by the Tribunal in the case of Singareni Colleries Ltd. vide Final Order No. 1842/96 dated 27.9.96. He contended that there was suppression in the matter and therefore confirmation of duty demand is correct.
5. On consideration of the submissions and on perusal of the order of Additional Collector, we notice that even at the stage of investigation, the Accounts Officer of the appellants Shri P.L. Sultania had denied the allegation of manufacture of crane in their units and had stated that they had entrusted the work of design, fabrication, manufacture and installation of crane to two independent job workers named above and since they have not manufactured the crane, duty cannot be confirmed on them besides stating that the activity did not result in emergence of any immovable property and is not dutiable. Without going into the merits of the question as to whether the item is goods or not, we are of the considered opinion that the appellants had taken consistant stand as the records disclose that they have given all the details of the activity of design, manufacture and installation of crane to independent manufacturers and they have also produced invoices to this effect and other evidence to prove that the work was carried out by two independent manufacturers who carried out the work on their own as independent manufacturers on principle to principle basis. There is nothing on record to indicate that the two independent job workers were only hired labourers and that the appellants themselves have carried out the work on their own. Therefore, the rejection of their plea by the Additional Collector was not correct and proper. Merely because the appellants had supplied some materials and the work was carried out at their site, that by itself is not sufficient to hold that the appellants are the manufacturers. This points has been upheld by the Apex Court in the case of CCE v. Kerala State Electricity Board as noticed from (sic). The Hon'ble Supreme Court confirmed the Tribunal's judgment on this point rendered in the case of Kerala State Electricity Board as (sic). This judgment has been followed in a number of cases and one such case is CCE v. SE, TNEB, Trichy by Final Order Nos. 1660 to 1664/98 dated 21.8.98. In this view of the matter, the appellants succeed and the impugned order is set aside and the appeal allowed with consequential relief if any as per law.