1981 (2) TMI 233 - CGOVT - Central Excise

Summary

Issues:
Interpretation of Notification 34/75 for exemption from duty under Tariff Item 68 for wooden cases and articles manufactured by the petitioners. Determination of the number of workers employed by the petitioners prior to and after the bifurcation of premises under the Factories Act. Analysis of the definition of "workers" under the Factories Act and its application in the case. Examination of Notification 54/75 criteria for exemption based on the number of workers "working or were working" in the factory.

Interpretation of Notification 34/75:
The judgment addressed the issue of whether the wooden cases and articles manufactured by the petitioners were liable for duty under Tariff Item 68, Central Excise Tariff. The relevant Notification 34/75 provided an exemption for goods produced in a factory with less than 49 workers. The petitioners had separated the manufacturing of wooden cases and articles into two premises after which each factory employed less than 49 workers. However, the authorities held that prior to the separation, the factory had employed more than 49 workers, making the goods produced during that period dutiable. The Appellate Collector upheld this decision.

Definition of "Workers" under the Factories Act:
The petitioners argued that the workers engaged by contractors for manufacturing should not be considered their employees, as they were not directly employed by them. However, the judgment clarified that as per the Factories Act, workers include those employed directly or through any agency in the manufacturing process. The helpers engaged by the contractors were involved in the manufacturing process, making them workers as defined by the Act. The authorities verified records showing that more than 49 workers were employed before the separation, justifying the duty imposition for the relevant period.

Analysis of Notification 54/75 Criteria:
The judgment analyzed Notification 54/75, which required exemption eligibility based on the number of workers "working or were working" in the factory. The wording indicated that both conditions must be satisfied, and if on any day in the preceding 12 months there were 49 workers, the exemption would not apply. Despite the change in the firm's constitution post-separation, the number of workers employed by both units was crucial. Therefore, duty was deemed payable for the period after the separation. The decision was upheld as legally sound.

Conclusion:
The judgment concluded that the lower authorities' decision was correct in law, and there were no grounds to interfere with the order in appeal. The revision application was rejected based on the proper interpretation of the notifications and the Factories Act regarding the number of workers employed and the duty liability for the wooden cases and articles manufactured by the petitioners.