M. Santhanam, Member (J)

1. As common question of facts (and) of law are involved in all these appeals, they were taken up together and are being disposed of by this common order.

2. The appellants in Appeal No. 322/85 and the respondents in the other appeals fabricate steel structures out of duty-paid materials supplied to them by Visakhapatnam Steel Project (hereinafter called as VSP). They have entered into contracts for the supply, fabrication and erection of structural steel and cladding works of Rolling Mills and Steel Melting Shop ( a shed ) in the project area. The above firms are contractors doing the fabrication work at the site allotted to them in the project area of VSP with their own machinery and workers. Show cause notices were issued to them on the basis that these contractors fabricate steel structural from out of iron and steel products like plates, angles, joists, channels, rods and strips as per the specification of VSP. The steel structural so fabricated are shifted to the project site for the erection of the shed aforesaid. According to the Department, these steel structural fabricated from the iron and steel produces by cutting, drilling holes and welding is "goods" different from and has a distinctive character and use as compared to the raw materials. The entire work of fabrication and erection done by the firms amount to manufacture under Section 2(f) of the Central Excises Salt Act, 1944. These goods would, therefore, attract duty under T.I. 68. They have not taken out necessary licences despite such a requirement under the Rules nor have they paid duty under T.I. 68, CET. Replies were sent to the show cause notices alleging that fabrication and erection of structural steel were part of the execution of works on contract and that they were not goods as understood in the commercial parlance. The work of fabrication would not attract the provisions of the Central Excises Salt Act, 1944. They have stated as follows: -

"What is being done by us is mere fabrication from duty-paid materials for fulfilling the contract works we have with Visakha Steel Plant. These processing/fabrication, are not manufactured, as no "goods" as defined in this context are obtained."

They have also placed reliance on the order of the Government of India (Order No. 264 dated 15-12-1981) in the case of Hindustan Steel Works Construction Limited. It was held therein that the nature of processing involved could not be considered to be manufacture for the production of any goods. The firms also contended that the site temporarily allotted for the ultimate purpose of enabling them to carry out their structural works could riot be treated as factory. They placed reliance on the judgment of the Gujarat High Court reported in 41 ELR 75 (M/s. Simon Carges (India) Limited). They also relied on an unreported judgment in criminal revision petition No. 267/78 relating to Engineering Construction Corporation.

3. The Deputy Collector of Central Excise, Visakhapatnam re-examined the case and dropped the proceedings. He held that steel structurals were not conventional goods distinctly different from the raw materials and they continued to retain to a great extent the essential properties and character of the original raw materials. The Collector of Central Excise, Guntur in the exercise of his powers vested under Section 35E(2) of the Central Excise Act called for and examined the records for the purpose of satisfying himself as to the legality or propriety of the said decision. He also made a spot inspection of the impugned goods at the factory. He directed the Deputy Collector, Madras for determination of points arising out of the order. A reference application was filed before the Collector (Appeals) Madras. The Appellate Authority also visited the site. He ultimately rejected the reference application and upheld the order passed by the Deputy Collector.

4. The appeals before the Tribunal by the Department have been filed on the ground t