2001 (4) TMI 155 - AT - Central Excise

Issues Involved:
1. Identity of the manufacturer.
2. Commonality and unity of the three units.
3. Limitation period for demand.
4. Computation of duty and excisability of certain items.

Issue-wise Detailed Analysis:

1. Identity of the Manufacturer:
The appellants claimed that they were not the manufacturers but that the carpenters and contractors who manufactured the goods at the site of the customers were the manufacturers. It was argued that the liability to pay duty, if any, would rest on those contractors and not on the appellants' units. The Tribunal examined Section 2(f) of the Central Excise Act, 1944, which defines a manufacturer and considered various precedents. It was found that the appellants had a significant role in the manufacturing process, including soliciting and accepting orders, designing the furniture, supplying materials, and giving finishing touches. The absence of written contracts with the contractors made it difficult to accept that the relationship was on a principal-to-principal basis. The Tribunal concluded that the appellants were the manufacturers, even if some of the furniture was made at the customer's site.

2. Commonality and Unity of the Three Units:
The Show Cause Notice alleged that the three units were, in fact, a single entity, sharing common machinery, documentation, labor bills, and facilities. The Tribunal referred to the leading judgment in the case of J.N. Marshall Pvt. Ltd. v. C.C. Pune, which emphasized the need to consider all circumstances, including common control of production and sales, management control, and financial relationships. It was found that the units had common control, shared premises, and coordinated activities, indicating unity. The statement of Suhas Ekbote, admitting to the intent to bifurcate activities to minimize taxes, further supported the allegation. The Tribunal upheld the finding that the clearances of the units should be clubbed together.

3. Limitation Period for Demand:
The appellants argued that they were under a bona fide belief that their activities did not attract excise duty. They referred to correspondence with the CBEC and a Trade Notice. However, the Tribunal found that the appellants had taken elaborate measures to evade duty, including splitting documents and creating a facade of separate units. The evidence indicated that the appellants were aware of the duty requirements and had intentionally tried to reduce their liability. Therefore, the extended period for making the demand was correctly invoked.

4. Computation of Duty and Excisability of Certain Items:
The Tribunal addressed the computation of duty, noting that the value of materials supplied by M/s. Ekbote Enterprises should be included in the assessable value of the furniture. The claim that the furniture was handicraft and therefore exempt was not pressed by the appellants. The excisability of partitions, false ceilings, and other items was to be determined based on their attachment to the earth. If they were permanently attached, they would not qualify as goods. The Tribunal remanded the matter to the Commissioner for re-computation of duty, allowing for deductions and Modvat credit where applicable. The demand should be made only from the principal unit, in accordance with the Supreme Court's ruling in the Gajanan Mills case.

Conclusion:
The Tribunal held that the appellants were the manufacturers of the furniture, the clearances of the units should be clubbed, the extended period for demand was correctly invoked, and the duty should be re-computed with necessary deductions and adjustments. The matter was remanded to the Commissioner for further proceedings.

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