2002 (11) TMI 717 - AT - Central Excise

Film sets and settings - Excisability - Works of art - Sculptures - Manufacture - Building hardware - Tailors dummies - Furniture pieces by the RFC division - Classification - Valuation - Furniture supplied to hotels/cafeteria - SSI Exemption - Furniture found dutiable by Tribunal

Issues Involved:
1. Classification of FRP sections and statues.
2. Classification and excisability of furniture.
3. Eligibility for exemption under Notification No. 76/86 as handicrafts.
4. Determination of the manufacturer.
5. Limitation and penalty.

Issue-wise Detailed Analysis:

1. Classification of FRP Sections and Statues:

The appellants argued that the film sets, settings, and statues made from FRP and PoP materials are works of art and not excisable items. They contended that these items do not have commercial identity or utility and are not traded as articles of plastic or PoP. The Commissioner classified these under Chapter 39.25 and 96.18 of the Central Excise Tariff Act, 1985, respectively. However, the Tribunal found that these items are artistic creations used for film settings and do not qualify as excisable goods. The Tribunal concluded that these items are not marketable and do not fall under the specified tariff headings.

2. Classification and Excisability of Furniture:

The Commissioner classified the furniture made at Harmony under Chapter 94.03 of the Central Excise Tariff Act, 1985, and imposed duty. The appellants argued that the furniture was handcrafted by independent contractors and not mass-produced for commercial use. The Tribunal found that items supplied to studio sets as props are not real furniture but designed for specific effects in films. These items are excluded from Chapter 94 by Chapter Note 1(k) of the Central Excise Tariff. However, certain items supplied to hotels and offices could be classified under Chapter 94.03, but their eligibility for exemption as handicrafts needs to be determined.

3. Eligibility for Exemption under Notification No. 76/86 as Handicrafts:

The appellants claimed exemption under Notification No. 76/86 for handicrafts. The Supreme Court in the case of Louis Shoppe laid down two tests for an item to qualify as handicraft: it must be predominantly made by hand and graced with visual appeal. The Tribunal found that the items made at Maya and Harmony are artistic creations and could qualify as handicrafts. The eligibility for exemption for each item needs to be re-examined based on these criteria.

4. Determination of the Manufacturer:

The Commissioner held Harmony as the manufacturer and liable for duty. The appellants argued that independent contractors were the actual manufacturers. The Tribunal found that Harmony facilitated the manufacturing process but did not directly employ the workers. The determination of the manufacturer needs to be re-examined, considering the involvement of independent contractors and the role of Harmony.

5. Limitation and Penalty:

The Commissioner imposed penalties under various sections of the Central Excise Rules and demanded duty for the extended period. The appellants argued that there was no suppression of facts as the activities were well known and not previously subjected to duty. The Tribunal found that the extended period of limitation might not be applicable, and penalties need to be reconsidered. The matter is remanded for re-determination of duty and penalties based on the findings.

Conclusion:

The Tribunal set aside the order of the Commissioner and remanded the matter for re-examination of the classification, excisability, eligibility for exemption, determination of the manufacturer, and penalties. The appeal is disposed of in these terms.

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