2001 (10) TMI 1017 - AT - Central Excise

Issues:
1. Duty demand and penalty imposed on furniture items under Central Excise Act.
2. Determination of the manufacturer of furniture items.
3. Classification of furniture items as excisable goods.
4. Exemption under small scale exemption and duty re-calculation.
5. Examination of agreements between appellants and sub-contractors.
6. Nature of relationship between appellants and sub-contractors.
7. Excisability of furniture items fixed to walls or ground.
8. Limitation on demand and abetment of duty payable.
9. Consideration of Modvat credit.

Analysis:
1. The case involved a duty demand of Rs. 2,25,68,666 on furniture items under Chapters 44, 70, 76, and 94 of the Central Excise Tariff Act, 1985, along with penalties imposed on the appellants. The Commissioner confirmed the duty demand and penalties based on the findings of mis-declaration and non-payment of duty by the manufacturer, M/s. Jayant K. Furnishers (JKF).

2. The primary issue was to determine the actual manufacturer of the furniture items. The Commissioner held that JKF was the manufacturer as they were responsible for the completion of work, supplied raw materials to laborers, and supervised the manufacturing process. The appellants argued that independent contractors who executed the manufacturing work should be considered the manufacturers, presenting agreements showing a principal-to-principal relationship. However, the Commissioner did not adequately consider these aspects.

3. The classification of furniture items as excisable goods was contested by the appellants, claiming certain items were immovable property and not liable to duty. The Commissioner rejected this argument, classifying various furniture items as marketable goods and subject to duty, while allowing duty exemption on certain bought-out items.

4. The small scale exemption and duty re-calculation were addressed by the Commissioner, resulting in a revised duty demand after considering the SSI exemption. Penalties were also imposed based on the revised duty amounts.

5. The examination of agreements between the appellants and sub-contractors was crucial in determining the manufacturer. The Tribunal emphasized the need to analyze these agreements to establish the nature of the relationship between the parties.

6. The nature of the relationship between the appellants and sub-contractors was highlighted, with the Tribunal directing a re-examination by the Commissioner to determine the manufacturer based on a principal-to-principal relationship.

7. The excisability of furniture items fixed to walls or ground was debated, with the appellants arguing that such items should not be considered excisable goods. The Tribunal directed the Commissioner to re-examine this issue, considering the attachment of items to immovable structures.

8. The issue of limitation on demand and abetment of duty payable was raised by the appellants, along with a claim for Modvat credit if duty was found payable. The Commissioner was instructed to consider these pleas during the fresh assessment.

9. In conclusion, the impugned order was set aside, and the appeals were allowed for remand to the Commissioner for a fresh assessment, providing the appellants with a reasonable opportunity to present their defense and be heard.

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