1991 (10) TMI 142 - AT - Central Excise

Summary

Issues Involved:

1. Definition and applicability of the term "factory" u/s 2(m) of the Factories Act, 1948.
2. Determination of the manufacturer responsible for excise duty.
3. Applicability of the limitation period for demand.
4. Proper service of Show Cause Notice.

Summary:

1. Definition and Applicability of "Factory":

The primary issue was whether the casting yards operated by the appellants could be considered a "factory" u/s 2(m) of the Factories Act, 1948. The Tribunal examined the definition of "manufacturing process" and "factory" and concluded that the term "premises" includes open land. The Tribunal referenced several judgments, including the Allahabad High Court and the Supreme Court, which affirmed that temporary or seasonal operations could still be classified as factories. Thus, the Tribunal ruled that the casting yards were indeed factories under the Factories Act, 1948.

2. Determination of the Manufacturer:

The appellants contended that the contractors, not the irrigation department, were the manufacturers. The Tribunal, however, upheld the Collector's finding that the contractors were merely job workers and that the irrigation department was the principal manufacturer. The Tribunal noted that the contractors operated under the supervision and control of the appellants, who provided the land, raw materials, and machinery.

3. Applicability of the Limitation Period:

The Tribunal addressed whether the demands were time-barred. The learned Collector had invoked the extended period under the proviso to Section 11A of the Central Excises and Salt Act, 1944, due to the appellants' failure to disclose the manufacturing activity. The Tribunal agreed, citing the appellants' responsibility to inform the Excise Department about their manufacturing activities. The Tribunal found no evidence of a bona fide belief of non-excisability by the appellants, distinguishing the case from the Supreme Court ruling in Padmini Products.

4. Proper Service of Show Cause Notice:

The appellants argued that the Show Cause Notice should have been served on the Secretary to the Irrigation Department rather than the Superintendent Engineer. The Tribunal found that the Superintendent Engineer adequately represented the department and upheld the validity of the service of the Show Cause Notice.

Conclusion:

The Tribunal dismissed the appeals, affirming the duty demand and rejecting the appellants' claims for exemptions and benefits under various notifications. The Tribunal found no infirmity in the Collector's findings and upheld the classification of the casting yards as factories, the determination of the irrigation department as the manufacturer, and the invocation of the extended limitation period for the duty demand.