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CUSTOMS, EXCISE AND GOLD (CONTROL) APPELLATE TRIBUNAL, NEW DELHI
B.B. Gujral, M. Gouri Shankar Murthy, A.J.F. D’Souza, JJ.
Orissa Construction Corpn. Ltd. -Appellant
Versus
Collector of Central Excise, Bhubaneswar -Respondent
Order No. B-567/83
Decided On : 10-06-1983
1. In this revision under Section 36 of the Central Excises and Salt Act, 1944 (as it stood at the relevant time), hereinafter referred to as the Act, transferred to the Tribunal and heard by us as if it were an appeal pursuant to Section 35 of the Act, it would appear that-
(a) the Appellant entered into a composite contract with the State of Orissa for fabrication, supply and erection of radial gates for which a lump-sum payment was to be made in terms of the contract ; the State of Orissa was to supply the Appellant, bars, plates, slabs etc. and radial gates were to be manufactured and erected at the site ; the contract, however, did not quantify the consideration separately for fabrication, supply and erection ;
(b) the Appellant had failed to obtain a licence under Sec. 6 of the Act read with Rule 174 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules), notwithstanding that, admittedly, they were fabricating the aforesaid gates without the aid of power employing more than 49 workers ;
(c) a notice dated 12-4-1977 was accordingly issued to the Appellant requiring the Appellant to show cause-
(i) why a penalty should not be imposed on the Appellant; and
(ii) duty amounting to Rs. 20,860/- due on the goods should not be demanded under Rule 173-Q of the Rules ;
(d) in reply the Appellant stated, inter-alia, that-
(i) the Appellant was not directly connected with the manufacture of goods for sale "inasmuch as they manufacture different shapes of finished goods of other Departments" and as such they were not liable to pay excise duty or observe any of the formalities under the Act and the Rules. The materials were supplied to the Appellant by the respective Departments of the Govt. of Orissa and the Appellant had merely undertaken the job-work. The ownership of the materials at all times remained with the State of Orissa and consequently the finished goods as well. The Appellant is, therefore, not a "manufacturer" ;
(ii) there has been no "manufacture" by the Appellant, much less, of "goods" that can be bought and sold and known as such in the market ;
(iii) if at all excise duty is leviable, it is to be levied upon and paid by the owner and not by the agent for manufacture ;
(iv) in any event, the plates and sheets of steel used for the manufacture of the gates in question were already assessed to duty under item 26AA of the Central Excise Tariff and cannot be the subject-matter of further levy ;
(e) in the hearing before the adjudicating officer, the Appellant further submitted that-
(i) the raw materials for the manufacture of the gates in question are plates and sheets of steel falling under item 26AA of the First Schedule to the Act and they were already duty paid having been purchased by the respective Departments of the Govt. of Orissa from M/s. Hindustan Steels Ltd. and Notification No. MF (DRI) 70/73-C.E., dated 1-3-1973, as amended exempts from duty of such forms made from plates and sheets falling under sub-item (2) of item No. 26AA ;
(ii) assuming that the gates in question are liable to excise duty under item 68 of the first Schedule, they are classifiable as job-work and the liability to duty is only to the extent of the work done in terms of Notification No. 119/75 dated 30-4-1975 ;
(f) the adjudicating officer held that-
(i) the gates in question are excisable in terms of item 68 of the First Schedule ;
(ii) the Appellant commenced production from 1-7-1976 without obtaining a licence for manufacture in terms of Sec. 6 of the Act read with Rule 174 of the Rules and thereby contravened the aforesaid provisions;
(iii) the Appellant had also removed the goods so manufactured without payment of duty and observance of the formalities and consequently contravened Rule 9 (1) read with Rule 173-PP of the Rules and thereby became liable to penal action in terms of Rule 173 of the Rules; and accordingly ordered duty to be determined and paid at 1% of the value of the goods cleared between 1-7-1976 and 17-6-1977 a
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