1981 (3) TMI 88 - CGOVT - Central Excise

Summary

Issues:
1. Whether the boats manufactured by the petitioners are excisable under item 68 of the Central Excises & Salt Act, 1944.
2. Whether the petitioners are eligible for exemption from central excise duty under specific notifications.
3. Whether the open yard where the boats are manufactured qualifies as a 'factory' under the Factories Act, 1948.
4. Whether the value of the engine supplied by customers for installation in the boats should be included in the assessable value of the goods.

Analysis:

1. The petitioners argued that the boats are not excisable under item 68 of the Act because the open yard where they are manufactured does not qualify as a 'factory' under the Factories Act, 1948. They contended that a factory should have a building with its precincts, and since there is no building in the open yard, it should not be considered a factory. However, the government disagreed, citing legal definitions that include open land as premises for a factory. The Supreme Court also supported this interpretation in a previous case, leading the government to conclude that the open yard is indeed a factory.

2. The petitioners claimed exemption from central excise duty under specific notifications due to the number of workers and power usage in the manufacturing process. However, the government found that the petitioners failed to provide evidence supporting their claims. The government accepted the statement of the shipping yard manager that 100 workers were engaged in boat manufacturing, shifting the burden of proof to the petitioners. As the petitioners could not produce documentary evidence, the government upheld the lower authorities' decision.

3. Regarding the engine supplied by customers for installation in the boats, the petitioners argued that it should not be included in the assessable value of the goods because it is not an integral part of the boat but merely an accessory. They also claimed that the installation of the engine was job work, entitling them to a benefit under a specific notification. However, the government disagreed, stating that the engine is essential for the boat's operation and is not just an accessory. Therefore, the petitioners' argument was deemed incorrect.

4. Ultimately, the government found no reason to interfere with the lower authorities' decision, stating that the order in appeal was correct in law. As a result, the revision application was rejected, and the original decision was upheld.