9911796707
TMI Blog1994 (2) TMI 177X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Excises Salt Act, 1944 (the old Tariff). Some items manufactured were falling under item No. 68 of the old Tariff. The goods manufactured by them along with the goods manufactured by other manufacturers, and the goods procured from the market, were used by them in the execution of their works contracts. 3.1 In the show cause notice dated 27-6-1986 the following allegations were levelled against the appellants :- (1) The assessee charged higher prices from their customers than the prices declared to the Central Excise Department in respect of package type air-conditioners, evaporators, condensers, cooling coils etc. (2) They, without obtaining Central Excise licence and without observing prescribed central excise formalities, produced complete compact units (such as `Utility brand package chillers, water chilling machines, air handling units, fan coil units, package type air-conditioners, `Utility brand condensing units etc.), at sites, and cleared the same for sale prior to their installation. They were raising invoices for such units as a whole, while paid central excise duty only on some of the parts produced by them in their factory (such as shell and tube conden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inted out to him with regard to the show cause notice issued to them, but he has merely stated that the same were not accepted. It was submitted that when the discrepancies were specifically pointed out, it was the duty of the Collector to examine the discrepancies and to redetermine the exact amount of duty payable (ground-VII under Para 13 of the Appeal Memo). 7. The matter was posted for hearing on 5-1-1994 and 6-1-1994, when Shri M. Chandrasekharan, Sr. Advocate with Shri J.S. Agarwal, Advocate, appeared for the appellants. Shri Siddarth Kak, Joint CDR and Shri B.K. Singh, SDR represented the respondent. 8. Shri M. Chandrasekharan, the learned Sr. Advocate explained the activities of the appellants as manufacturer of excisable goods and as contractors for works contracts, for designing, erection, installation and assembling of air-conditioning plants. The various appliances, equipment and other items necessary for completion of the jobs were partly manufactured by them in their own factories and partly were got manufactured from other manufacturers. Some items were purchased from the open market. Depending on the nature of the job, the completion of the works contracts took ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned JCDR referred to the contracts with M/s. Ritu Pharma Needs (P) Ltd. at page 106 of the paper book wherein it has been mentioned that the masonary work was to be done by the owner. He submitted that the goods such as condensing units, water cooling condensor etc. have been identified by the brand name of the manufacturer `Utility . On the question of limitation it was submitted that it was the date of the RT-12 returns that was relevant for the show cause notice. Referring to the Tribunal s decision in the case of Aruna Industries v. CCE - 1986 (25) E.L.T. 580 (Tribunal), relied upon by the appellants, the learned JCDR referred that the Tribunal in that case were dealing with a situation wherein the agreements were for construction, that is supply of fabrication and erection of structural steels and clading works. The contracts comprised of the construction and the completion of the works. There was nothing in the contracts to hold that there was a sale of raw-materials by one party to the other. He submitted that the facts in that case before the Tribunal were different. 10. The matter could not be concluded on 6-1-1994, and was taken up on 7-1-1994 when the learned JCDR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bled units. Reference was also made to the Tribunal decision in the case of M/s. J.K. Export Industries v. CCE - 1983 (14) E.L.T. 2390 (Tri.) wherein it has been held that the plant and machinery erected at site and attached to earth were not dutiable as `goods . Further the Tribunal decision in the case of Gujarat Machinery Manufacturers Pvt. Ltd. v. CCE - 1983 (13) E.L.T. 825 (Tri.) to the effect that `plant is not `goods and thus not liable to duty under item No. 68 of the Central Excise Tariff has been affirmed by the Hon. Supreme Court, vide report at page A58 in 1989 (44) E.L.T. Relying upon the Tribunal s decision in the case of Chowgule Co. (Hind) Pvt. Ltd. v. CCE, 1985 (21) E.L.T. 110 (Tri.), and Madras High Court decision in the case of U.O.I. v. T.S.R. Co. - 1985 (22) E.L.T. 701 (Madras), it was mentioned that advertisement/publicity/label etc. were not determinative for classification of goods or for the purposes of exemption notification. On the question of limitation it was submitted that once their classification lists and price lists have been approved then the charge of wilful mis-declaration could not be sustained, as held by the Tribunal in the case of Rainbo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons in the trade. Unfortunately since no such doubt was raised by the Collector, there was no necessity of the appellant filing affidavits before him. In view of the finding of the Collector which has taken the appellant by surprise, it has become necessary for the appellant to annex herewith affidavits from persons in the trade to show how the work of assembling, erecting and installing central air-conditioning and refrigerating plant is carried out, which are marked as annexure-H (colly.). As such the order is perverse and deserves to be quashed and ought to be set-aside. 14.3 These affidavits were not before the adjudicating authority. The learned Sr. Advocate representing the appellants had agreed that these affidavits were not before the Collector. The learned Jt. CDR representing the Respondent had also remarked that these affidavits were filed after adjudication of the case. In the interest of justice we consider that the jurisdictional adjudicating Collector should have an opportunity to deal with these affidavits and to comment on the contents thereof. 14.4 The Para 13(VII) of the Grounds-of-Appeal the appellants have mentioned as under : The Collector has committ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deductions permissible under law, if otherwise eligible, have to be considered. 15. As we have quoted above, this case involves a number of important issues of facts and law. Although for the reasons indicated above, we find ourselves handicapped in taking a categorical view in the matter, as the matter has been argued before us vehemently and in considerable detail by both the learned Sr. Advocate for the appellants, and the learned Jt. CDR for the respondent, we consider it desirable to briefly discuss the main issues. Our observations are however only tentative and simply to facilitate the decision to be arrived at by the adjudicating Collector in de novo proceedings as we are of the view that it is a fit case which requires to be remanded back for de novo adjudication. 16.1 The two main issues for consideration in this case are as under : (1) Whether the assembly/fabrication of specified units at site (before their installation in the `works ), out of different parts, partly manufactured by the assessee in their own factories, and partly procured from outside, can amount to the process of manufacture, and whether the site at which assembly/fabrication is undertaken, can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t site and cleared such ready assembled units for sale prior to their installation without payment of central excise duty. It has been alleged that the assembly/fabrication work done at site amounted to the process of manufacture and the assessees were required to obtain L4 licence for each of the sites where the manufacturing activity was performed. 18. The appellants have contested that neither the `site could be termed as a `factory , nor the `plant could be construed as `goods . They have denied that they manufacture ready assembled units. They have stated that no manufacturing process was being carried out on those sites. 19. Central Excise Duty is levied and collected on the excisable goods produced or manufactured, but neither all the goods are excisable nor each and every process is a process of manufacture for the purposes of Central Excise levy. There are a number of authoritative judicial pronouncements as what are the `goods and as what are the process/processes which amount to the process of manufacture for the purposes of excise levy. We need not to deal with them in detail, presently in view of our consideration that on some factual aspects of the matter the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Air Handling Unit Nos. 1471 1471 2500 2500 693 727 11. Room Air-conditioner Nos. 329 329 6000 6000 Nil Nil 12. Condensor, Accessories other items Nos. 360 360 500 500 238 295 13. Chiller,Accessories other items Nos. 160 160 500 500 165 238 14. Water cooled/air cooled package Units Nos. 69 69 300 300 1 11 22. In Section 2(e) of the Central Excises Salt Act, 1944, `factory has been defined as any premises including the precincts thereof wherein or in any part of which excisable goods other than salt are manufactured or wherein or in any part of which any manufacturing process connected with the production of those goods is being carried on or is ordinarily carried on. While `land itself could be a factory as is clear from the provisions of Sections 16 and 17 of the Act, it is necessary that excisable goods should have been manufactured thereon. In this case to our mind this important question has not been discussed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penses like surveying, drawing, designing, engineering, testing, supervision etc., go into the costing of the equipment and appliances installed and assembled at different sites. The appellants were raising consolidated bills towards the sales effected under works contracts at site. The goods manufactured by them in their factories were utilised by them in such works contracts, which also included such activities as supervision, erection, fabrication, testing, conversion etc., and the consolidated bills raised included charges towards these activities too. From the agreement with M/s. Thomson Press (I) Ltd., Faridabad, it is seen that the contract value for the execution of the work described in the agreement included design, fabrication, supply of materials, erection and commissioning. It was noticed that a much higher amount has been charged from their customers in respect of the various items manufactured/assembled/fabricated by them than the amount of which the central excise duty have been paid. 26. Prima facie we feel that in such a situation the correct assessable value of the goods manufactured could only be arrived at after deducting from the contract value, the expenses ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
