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TMI Blog1984 (1) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... he balance sheet of the company for the year ending 31-3-1979. 3. Show cause notice C. No. V/4/1/649/81, dated 2-11-1981 was issued by the Assistant Collector of Central Excise, Visakhapatnam to M/s. Hindustan Shipyard Ltd. informing therein that those goods were classifiable under Tariff Item No. 68 of Central Excise Tariff. 4. M/s. Hindustan Shipyard Ltd., replied upon Notification No. 56/75-C.E., dated 1-3-1975. It was contended that the Floating Cassain Gate and Flap Type Gate in question were manufactured by them for the Naval Authorities at Visakhapatnam Hindustan Shipyard Ltd. Visakhapatnam is wholly owned by the Government of India and the goods in question manufactured by it were intended to be used by Naval Dry Dock Authorities - a Department of the Central Government and as such those goods were exempted for the levy of excise duty vide Notification No. 56/75-C.E., dated 1-3-1975. It was also contended that demand raised under Rule 9(2) of the Central Excise Tariff Rules was also not maintainable. 5. The Assistant Collector by his order No. 10/82, dated 27-1-1982 rejected the contentions raised by the appellants and held that a demand for duty at the appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng therein that the Appellate Collector should have given the benefit of Notification No. 56/75-C.E., dated 1-3-1975 and should have held that the impugned goods were not subject to excise duty. 9. We have heard Sh. D.V. Subha Rao, Advocate for the M/s. Hindustan Shipyard Ltd. and Sh. Luxmi Kumaran, S.D.R. for the Department on both the appeals and cross objections and this order of ours will dispose of both the appeal and cross objections. 10. There are two issues before us which require determination :- (i) Whether M/s. Hindustan Shipyard Ltd. are entitled to the benefit of exemption Notification No. 56/75-C.E., dated 1-3-1975. (ii) If issue No. 1 is not proved, whether demand raised under Rule 9(2) of C.E.T. Rules is valid? Notification No. 56/75-C.E., dated 1-3-1975 reads as under : All goods falling under Item No. 68 and manufactured by the factories belonging to the Central Government and intended for use by the Departments of the said Government, are exempt from the whole of the duty of excise leviable thereon . 11. The above notification grants an exemption from the whole of duty leviable on Tariff Entry No. 68 - goods manufactured by the factories bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ongs to the Central Government. 14. Shri Subha Rao also drew our attention towards the Memorandum of Association and Articles of Association of Hindustan Shipyard Ltd. in support of his contention that the shares are held by the President of India, that the Government of India has a pervasive control over the Hindustan Shipyard Limited and that the ship building is the monopoly of the Central Government and that the power of appointment is given to the Chairman by the President of India and the Board is also to be appointed by the President of India in consultation with the Chairman and that financial powers are also vested in the Central Government. According to him, for all intents and purposes Hindustan Shipyard Limited belongs to the Government and therefore, the factory running under the control and supervision of Hindustan Shipyard Limited belongs to the Central Government. The incorporation in the Companies Act is only to facilitate administrative efficiency and decentralisation. 15. The Departmental Representative countered the contention of the learned counsel of the Hindustan Shipyard Ltd. in the present circumstances of the case. A perusal of the Memorandum of Asso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct . 18. The various decisions cited by the learned counsel of M/s. Hindustan Shipyard Limited are not helpful in the present circumstances of the case. In all these judgments, the Hon ble Judges of the Supreme Court came to the conclusion that where a Corporation is an instrumentality or agency of the Government, it must be held to be an `authority within the meaning of Article 12 of the Constitution of India and hence subject to the same basic obligations as the Government. 19. The facts of the case however, are quite different. The question before us is whether Hindustan Shipyard Limited (A Government of India Undertaking) can be said to belong to the Government who has got its entire shareholders. The ratio of the decisions of the Hon ble Supreme Court are not applicable in the present circumstances of the case before us. 20. The welfare State under the Constitution of India has encouraged a number of public undertaking whose control lies with the State. The Government of India has evolved three basic legal patterns for state enterprises, namely : (1) Statutory corporations formed by and under special status both parliamentary and State : (2) Government departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipyard Limited cannot be said to belong to the Government. When Hindustan Shipyard Limited does not belong to the Central Government, how can the factory which is being run and managed by the Hindustan Shipyard Limited be said to belong to the Central Government? The cross objections filed by M/s. Hindustan Shipyard Limited are, therefore, not maintainable hence rejected. 23. On the question of applicability of Rule 9(2) of the Central Excise Rules, the Appellate Collector found that the appellants i.e. Hindustan Shipyard Limited bona fide believed that the impugned goods were not liable to duty and there was no intention on their part to evade duty and therefore, the provisions of Rule 9(2) of Central Excise Rules, 1944 could not be used against them and that the demand should be restricted to the normal time limit of 6 months only. 24. The findings of the Appellant Collector do not seem to be justified on this point in the present circumstances of the case. 25. Rule 9, as it stood prior to its amendment before 20th February, 1982 lays down time and manner of payment of duty. It lays down that no excisable goods shall be removed from any place where they are produced, cur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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