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2013 (12) TMI 87 - AT - Central ExciseWho is the Manufacturers - Whether as per the terms and conditions of the agreement Job worker is the manufacturer or the appellants are the manufacturer Held that - There was no supervision over the manufacture As held in COLLECTOR OF CENTRAL EXCISE, BARODA Versus MM KHAMBHATWALA 1996 (5) TMI 84 - SUPREME COURT OF INDIA - Incense sticks were put in packets and such packets were sold from the premises of the house-hold ladies and they did not go to the factory premises of the assessee - the sale proceeds went to the respondents but that will not change the character of manufacture - the said goods were manufactured by M/s. Raigad at the premises hired by the appellant - the machineries of job worker were under the supervision of supervisors appointed by the appellant Job worker is the manufacturers. Entitlement for benefit of Notification - If the appellants are the manufacturer then whether they are entitled for the benefit of exemption notification - Whether the goods are sea going vessel or not Held that - UNION OF INDIA Versus V. M. SALGAONCAR & BROS. (P) LTD. 1998 (3) TMI 134 - SUPREME COURT OF INDIA - Tugs and barges used by the appellants are sea going vessels - the question whether a transhipping vessel is an ocean-going vessel, can solely rest on the test of its dominant use to which their owners put them at times - Use may vary from season to season, port to port and also managers to managers - So in this area of understanding use of the article stands down-staged, and the Court must look at to know what actually the commodity is - The affidavit of Shri Arun Kapur, Naval Architect which clearly confirms that the tugs and barges in question are ocean going vessels which are not controverted or cross-examined by the Revenue - the tugs and barges are ocean going vessels and the appellants are entitled for the benefit of exemption Decided in favour of assessee.
Issues Involved:
1. Determination of the manufacturer of the said goods (tugs and barges). 2. Eligibility for exemption from Central Excise duty under specific notifications. Detailed Analysis: Issue 1: Determination of the Manufacturer The primary issue was whether the appellant or M/s. Raigad was the manufacturer of the tugs and barges. The Tribunal examined the agreement dated 15-9-1986 between the appellants and M/s. Raigad. Key clauses indicated that M/s. Raigad was to provide necessary labor while the appellants supplied materials. Payment was made to M/s. Raigad based on tonnage, not individual laborers, and M/s. Raigad used its own machinery and expertise for manufacturing. The Tribunal found that M/s. Raigad was not merely a labor supplier but a job contractor with its own resources and expertise, making it the actual manufacturer. This conclusion was supported by various precedents, including Diamond Cements Ltd. v. CCE, Bhopal and Kerala State Electricity Board, where the supplier of raw materials was not considered the manufacturer. The Tribunal rejected the Revenue's reliance on Shree Agency v. S.K. Bhattacharjee, noting that subsequent judicial decisions had clarified that job workers with their own resources are the manufacturers. Issue 2: Eligibility for Exemption from Central Excise Duty The second issue addressed whether the goods qualified as sea-going vessels and were thus eligible for exemption under specific notifications. The appellants provided substantial evidence, including an affidavit from Naval Architect Shri Arun Kapur, confirming that the tugs and barges were designed and constructed as sea-going vessels. The Tribunal noted that the affidavit was unchallenged by the Revenue and corroborated by the agreement with Indo Gulf, which required the vessels for sea voyages. The Tribunal referred to the Supreme Court's decision in V.M. Salgaoncar & Bros (P) Ltd., which emphasized the nature of the vessel over its use. Based on this precedent and the uncontroverted affidavit, the Tribunal concluded that the tugs and barges were indeed sea-going vessels, making the appellants eligible for the claimed exemptions. Conclusion: The Tribunal concluded that: 1. M/s. Raigad was the manufacturer of the tugs and barges, not the appellants. 2. The tugs and barges qualified as sea-going vessels, entitling the appellants to exemption from Central Excise duty under the relevant notifications. As a result, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. (Pronounced in Court on 4-6-2013)
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