1983 (10) TMI 260 - AT - Central Excise

Issues Involved:

1. Withdrawal of permission granted under Notification No. 119/75.
2. Determination of appellants as "manufacturers" under Section 2(f) of the Central Excises and Salt Act.
3. Eligibility for exemption under Notification No. 119/75.
4. Whether the transformers were "excisable goods."
5. Time-barred demands for duty.

Issue-wise Detailed Analysis:

1. Withdrawal of Permission Granted under Notification No. 119/75:

The appellants initially sought permission to remove transformers without payment of duty under Notification No. 118/75-C.E., which was granted but later withdrawn. The appeal on this point was not pressed by the appellants and was treated as withdrawn.

2. Determination of Appellants as "Manufacturers" under Section 2(f) of the Central Excises and Salt Act:

The appellants argued they were not "manufacturers" but merely hired labor under the control of IMP. They cited the contract provisions where testing, painting, and packing were done by IMP's workmen, and the appellants were prohibited from manufacturing for others. The Department countered that the appellants were indeed manufacturers, citing clauses requiring the appellants to register the premises as their factory and employ workers on their own account. The Tribunal observed that the terms of the contract indicated IMP's financial involvement and supervision, but this did not negate the appellants' role as manufacturers.

3. Eligibility for Exemption under Notification No. 119/75:

The appellants claimed they should be entitled to the benefit of the exemption under Notification No. 119/75, arguing their work amounted to job work. The Department argued that the appellants were producing a distinct article (transformers) and not merely performing job work. The Tribunal noted that the processes carried out by the appellants resulted in transformers, and thus, they could not be considered merely as job workers.

4. Whether the Transformers were "Excisable Goods":

The appellants contended that the transformers were not excisable goods when removed from their premises as they required further processes (testing, painting, packing) by IMP to be marketable. The Department argued that these processes did not materially change the nature of the transformers. The Tribunal found that the Department had been recovering duty on the finished transformers at the stage of clearance by IMP, indicating double duty was being charged on the same goods. The Tribunal concluded that if the transformers were excisable at the stage they left the appellants, they could not be charged again at the stage they left IMP.

5. Time-barred Demands for Duty:

The appellants argued that the demands were time-barred as their actions were with the full knowledge of the Department, invoking only the normal time limit under Rule 10. The Department's arguments on this aspect were not detailed by the Tribunal. The Tribunal found that the demands for duty could not be sustained as the Department had already recovered duty on the finished transformers from IMP.

Conclusion:

The Tribunal allowed the appeals related to the duty demands on the grounds that the Department had already recovered duty on the transformers at the stage of clearance by IMP. The third appeal, relating to the withdrawal of permission under Notification No. 119/75, was dismissed as withdrawn.

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