V.T. Raghavachari, Member (J)

1. Notice dated 9-5-1986 was issued to the appellants (M/s. Kerala State Electricity Board) and various other persons, under which they were called upon to state why duty amounting to Rs. 75,29,822.60 paise ought not to be demanded from the Kerala State Electricity Board in respect of PSC/PCC poles and RCC poles manufactured by them (falling under Item 60 CET) and why action should not be taken against all of them for imposing penalty, etc. The appellants replied contending that they were not the manufacturers of the poles, but it was only their contractors (to whom also the show cause notice had been issued) who were the manufacturers. Under order dated 17-11-1986 the Collector of Central Excise, Cochin rejected the said contention. He held that the appellants were the manufacturers of the poles and were, therefore, he able to pay excise duty. Taking note of the claim for exemption in respect of some of the RCC poles (under Notification 179/77) the Collector held that they were liable to pay appropriate duty in respect of the poles manufactured by them during the period 1981-82 to 1984-85. He did not impose any penalty on the appellants or the contractors. This appeal is against the said order.

2. We have heard Shri Shriram Panchu, Advocate for the appellants and Smt. Saxena for the Department.

3. In the grounds of appeal a contention had been raised that principles of natural justice had been violated in the proceedings before the Collector since the Collector, who took into consideration the replies sent by the Contractors (many of whom claimed that they were not the manufacturers but only the Kerala State Electricity Board) did not furnish the appellants with copies of those replies and held his proceedings in adjudication separately with reference to the Contractors. Before us Shri Panchu submitted that he would not press that ground (since that may result in a remand only) but would submit arguments on the merits and would invite us to render our decision on the merits of the issue. Accordingly, we are not going into the contention regarding violation of principles of natural justice.

4. Another contention raised before the Collector and also in the grounds of appeal, is that these poles are not goods and no excise duty would be liable to be paid thereon. This contention had been overruled by the Collector in view of the decision of this Tribunal in the case of the Andhra Pradesh Electricity Board 1984 Vol. 16 ELT 579. Shri Panchu submitted that in view of the said decision he would not address us on the said question, though he does not abandon that contention. Following the said decision we hold that the poles are excisable commodities.

5. The main argument of Shri Panchu was that the Contractors were the actual manufacturers of the poles and the liability for payment of duty, if any, was only on the manufacturers and that the appellant Board was not the manufacturer and was under no liability to pay excise duty. In support of this contention he relied upon several tapes in the tender specifications , the subsequent agreements executed between the Board and the Contractors and certain other material. The said contention had been raised before the Collector also. The Collector had overruled this contention relying again on the decision in (supra) and also on the facts of the present case. Shri Panchu submits that the Collector was in error in relying on the said decision since in the said case the Andhra Pradesh State Electricity Board had accepted that they were manufacturing the poles but only contended that the poles were not excisable articles. Shri Panchu submits that the terms of the agreements between the appellant-Board and the Contractors would establish that the Contractors were not the hired labour of the appellants (as wrongly concluded by the Collector) but were independent Contractors manufacturing in their own right though on the orders of the Board. Smt. Saxena, supporting t