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TMI Blog1987 (10) TMI 155X X X X Extracts X X X X X X X X Extracts X X X X ..... lable in respect of such a manufacturing activity, the show cause notice, dated 17-6-1986 demanding from the appellants, in respect of such activity, duty amounting to Rs. 67,38,881.70p. Under the notice they were further called upon to show cause why the plant and machinery used in such manufacture ought not to be confiscated and why penalty should not be levied. Replies were sent by the appellants contending that no duty was payable in respect of the coffee-chicory blend and that, in any event, the quantum of such manufacture and clearance each year was far less than the quantum prescribed under notifications in force and therefore there had been no contravention of the Central Excise provisions and that in any event the major portion of the demand would be time barred as the larger period of limitation was not available to the Department. These defences were over-ruled and the Collector of Central Excise, Bangalore, under his order, dated 22-9-1986, confirmed the duty demand, confiscated the plant and machinery subject to redemption on payment of Rs. 5 lakhs and imposed a penalty of Rs. 5 lakhs on the 4th appellant and Rs. 1 lakh each on appellants 1 to 3. It is against the said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty was payable. 4. As earlier stated, the case for the Department appears to be that coffee-chicory blend is manufactured in the factory and then sent to the 4 units while the case for the appellants is that the chicory powder would be sent direct from the seller to the four sales unit and blending was being done in the said units only. In any event, from the records relied on by the Department itself, the strength of workers in the factory and the four sales units appears to have been 8, 5, 2, 5 and 4 only and had, at no time equalled or exceeded 10 in any one of them. As earlier mentioned the contention of Shri Sridharan is that the factory and four sale units were independent places of manufacture and therefore the number of workers in all of them ought not to be clubbed but must be considered independently and, if they are so considered, none of them would be a factory as defined in the Act. The Collector had rejected this contention and had held that clubbing the workers in all the five the number of workers exceeded 10 and therefore the manufacture was in a factory, taking all the 5 establishments together as one for that purpose. The question therefore would be whether eac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... constitute a factory, there are some decisions though they are not under the Factories Act but under the Employees State Insurance Act. But that may not be a very relevant circumstance for distinction since the question under consideration in the said decisions was also as to what would be a factory, as defined in that Act and the Factories Act. For instance it was held by the Madras High Court in N.V. Radhiah and Bros. v. E.S.I. Corporation (A.I.R. 1967 Madras 111) that where the manufacture of iron safes was carried on in one place and the painting work of such safes was done in a different place, both would form an integral part of the same factory, though they were separated by quite a distance. That was on the basis that the painting work is part of the manufacturing work of the safes or incidental thereto, since the manufactured iron safe would not be a finished product until it is painted. That is to say, the High Court held that if the work carried out at the two different places are so interconnected that the work of manufacture would not be complete without the activity at both places, the two places would together constitute a factory for the purpose of that manufac-tur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt or parts is carried out in one or more other places so as to constitute all the said places together into a factory in the light of the decisions cited earlier. To repeat, the only manufacturing activity is the mixing or blending of coffee powder with chicory powder and this does, and could, take place in a single place only, as there would be no occasion for the said single activity of blending being commenced at one place and completed at another place. As earlier mentioned, the number of workers in the factory in the Industrial Estate, as well as each of the 4 sales units, had never equalled or exceeded ten. Therefore, none of them would be a factory even if a manufacturing activity is carried on therein with the aid of powder. In the circumstances though the manufacturing activity of blending of coffee and chicory powder carried out at each of the said places would be an excisable activity (in view of the decision in the Brooke Bond case) attracting Item 68 C.E.T., the resultant blended product would not be liable to duty since each of the places of production would not be a factory for the purpose of the levy. 8. The fact that in proceedings under the Employees Providen ..... X X X X Extracts X X X X X X X X Extracts X X X X
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