1991 (2) TMI 303 - AT - Central Excise

Summary

Issues:
1. Demand of duty under Rule 9(2) of Central Excise Rules and Section 11A of Central Excises & Salt Act, 1944.
2. Imposition of penalty under Rule 9(2)/173Q and 226 of the Central Excise Rules.
3. Interpretation of Notification 46/81 regarding exemption based on the number of workers employed.
4. Classification of goods under Item 17(4) CET versus Item 68 CET.
5. Definition of 'worker' under the Factories Act and its application to the case.
6. Evidence regarding the number of workers employed and their roles in the factory.

Analysis:

1. The appeal challenged the order demanding duty of Rs. 2,33,658.70 under Rule 9(2) of Central Excise Rules and Section 11A of Central Excises & Salt Act, 1944 for the period 20-6-1984 to 6-2-1985, along with a penalty of Rs. 50,000 imposed on the appellants. The Collector concluded that the appellants misused the exemption Notification 46/81 by mis-declaring the number of workers employed, leading to the duty demand and penalty.

2. The appellant's consultant argued that the surprise visit by officers did not find 10 or more workers actually working in the factory, and certain workers were from other firms sharing premises. They disputed the inclusion of certain individuals as workers and highlighted reductions in manpower. Additionally, they challenged the classification of goods under Item 68 CET, claiming they should be classified under Item 17(4) CET.

3. The Department contended that workers like Shri Chandran and Sh. V.K. Shetty, though from other units, were involved in the production process, contrary to the appellant's claims. They emphasized the broad definition of 'worker' under the Factories Act and the significance of workers connected to manufacturing processes.

4. The Tribunal noted that the issue of goods classification under Item 17(4) CET was not raised earlier and cited a previous decision against the appellants. Regarding the number of workers, it relied on the Factories Act's definition of 'worker' to determine eligibility for exemption under Notification 46/81.

5. The Tribunal analyzed the definition of 'worker' under the Factories Act, applying it to the case to ascertain the eligibility for exemption based on the number of workers employed. It emphasized that workers connected to manufacturing activities were relevant for determining exemption status.

6. After considering the evidence, the Tribunal upheld the Collector's decision that the appellants employed more than 9 workers during the relevant period, making them ineligible for the exemption under Notification 46/81. The penalty imposed was deemed reasonable, leading to the rejection of the appeal.

This comprehensive analysis covers the various legal issues raised in the judgment, including duty demand, penalty imposition, interpretation of notifications, goods classification, and the application of worker definitions under the Factories Act.