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TMI Blog2015 (3) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... nst him be set aside. 3. Heard the learned consultant. As Shri Manoharlal Mistry has been died during the pendency of the appeal, therefore the penalty imposed on him is set aside. 4. The brief facts of the case are that the main appellant is engaged in the activity of interior decorators at the premises of their clients as per their requirements. An intelligence was developed that the main appellant has manufactured various items of furniture for M/s. Unit Trust of India, Belapur, Navi Mumbai, without obtaining Central Excise registration and without payment of excise duty and without following any Central Excise procedure. The premises of Unit Trust of India were investigated on 23.6.1997 and it was asked to produce relevant records/documents in respect of various activities of making/fixing/placing of furniture, fittings and interior designing carried out in their premises. On the basis of these documents, the premises of the appellant was also searched and various documents were drawn. Thereafter various statements were recorded and it was found that the main appellant is engaged in the activity of manufacturing of furniture and excisable item which they have cleared to Unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted in 1995 (75) ELT 571 (T). It is also submitted by the learned consultant that the decision of this Tribunal was having the field during the relevant time and the Hon'ble Supreme Court in Louis Shoppe reported in 1996 (83) ELT 13 (SC) held that the furniture made by hand cannot be treated as handicraft. Therefore the issue whether the furniture manufactured by the sub-contractor/appellant is exempted under Notification No. 76/86-CE was in dispute. In these circumstances, the extended period of limitation is not invokable as held by this Tribunal in the case of Jay Arts vide order No. A/354/2011/WZB/EB/C-II dated 19.4.2011. To support this contention, he further submits that the issue is of interpretation of the statutory provisions of the Central Excise Act/Rules, as items like partition etc. are immovable and not taxable whereas items like storage units etc. are taxable even though they may be immovable. The said issue was held in favour of the assessee in the case of Craft Interior Ltd. reported in 2005 (187) ELT 113, but the said decision was reversed by the Hon'ble Supreme Court reported in 2006 (203) ELT 529 (SC) wherein it was held that furniture would include ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9.1996, therefore penalty is not imposable as held by the Hon'ble Supreme Court in the case of Lal Mining Engineering reported in 2007 (215) ELT 167 (SC). As in this case the demand arises for the period prior to 28.9.1996, in the show cause notice the specific clause of Rule 173Q(1) has not been specified, therefore as held by the Hon'ble Supreme Court in the case of Amrit Foods reported in 2005 (190) ELT 433 (SC), penalty is not imposable. 10. For penalty imposed on Shri N.G. Kularia, the learned consultant submits that there is no allegation in the show cause notice with respect to the role played by the appellant and neither the show cause notice nor the order-in-original has discussed how the appellant is responsible for non-payment of duty.It is also submitted that the appellant was under bona fide belief that they are not manufacturer and excise duty is not payable by them on the items manufactured by them. It is also contended that as the penalty has already been levied on the appellant firm, therefore separate penalty is not warranted on the partners as held by this Tribunal in the case of Pravin N. Shah reported in 2014 (305) ELT 480, Moontex Dyeing reported in 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent for clarification which they have failed to do so. Therefore, extended period is rightly invoked. 13. For the allegation of fraud, collusion etc., the learned AR submits that the charging section in this case is Section 11A(1) of the Act. As the appellant has not filed any declaration under Notification 13/92 for exemption from registration, therefore, deliberate intention of evasion of duty is clear from the act. Thus the allegation of fraud, collusion etc. has been made in the show cause notice and the order-in-original. 14. For levy of interest and penalty, the learned AR submits that as per the CBEC circular No. 354/118/96 dated 6.1.1997, it has been clarified that if show cause notice has been issued after the enactment of the Finance Act, 1996, the provisions of Section 11AB & AC are applicable. Admittedly, in this case show cause notice has been issued thereafter, therefore the appellants are required to pay interest and penalty. He also submitted that the penalty is imposed under Rule 173Q of the Central Excise Rules, 1944. Therefore, the same is leviable against the appellants. In these circumstances, he prayed that the impugned order is required to be upheld. 15. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule, to complete the work during a stipulated period. 24. Loss arising during the course of completion of the job, either due to fault of their labours/workers, leading to emergence of any defective articles for making the job not according to the specifications given to them, was borne by these contractors. 25. All these terms taken together, would establish that these contractors were independent persons and not our hired labour." 17.1 In the adjudication order, the adjudicating authority has not considered this aspect and has not asked the appellant to produce these agreements as the appellant was relying on the agreements. A similar came up before this Tribunal in the case of AFL Pvt. Ltd. vs. CCE, Mumbai - II reported in 2013 (295) ELT 211, where this Tribunal has held as Under:- "14. On the contrary in the case of Diamond Cements Ltd. vs. CCE Bhopal - 2010 (283) ELT 226 (Tri.Del) the Tribunal held that merely because the appellants were supplying the raw materials and was exercising supervisory quality control over the goods, it cannot be held that the contractors were actually hired labourers especially when the contractors have admitted having fabricated the goods fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that case power was not supplied by the contractor to the sub-contractor, but in this case power has been supplied by the client himself to the contractor. Therefore, the same was transferred to the sub-contractor, but as per the agreement entered into between the appellant and the sub-contractor, they are doing their activity on principal to principal basis and the sub-contractor was responsible for any defect and if work is not as per the specification given to them. The appellant was not having control over the labour of the sub-contractor. In these circumstances, the sub-contractor is the manufacturer. 17.3 In the impugned order, the learned Commissioner has relied on the decision of Bajaj Auto Ltd. vs. CCE reported in 1995 (80) ELT 644 (T), but in that case there was a specific finding that job worker was hired labourers. That is not in the case of Ram Chand Sharma vs. CC&CE reported in 1992 (61) ELT 543 (MP), the Hon'ble High Court of Madhya Pradesh relied on the decision of Shree Agency vs. S.K. Bhattacharjee reported in 1977 (1) ELT (J168) (SC). In that case, the peculiar facts were that job workers were dummy units as entire profit of weavers has been taken away by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facture. Even assuming that what was supplied was component, but that by itself was not sufficient to fasten liability on the appellant. The component unless processed did not result in production of pump. And that having been done by independent units for payment the finding that it was manufactured on behalf of the appellants without any material cannot be upheld. In fact, no such finding has been recorded by the Tribunal nor any material could be pointed out which could establish that it was the appellant who manufactured the pumps or the independent units from whom it got the pumps manufactured were doing so on behalf of the appellant. The Tribunal in extending the meaning of the expression 'manufacturing' on behalf of the appellant by introducing the concept of supply of components went beyond the ambit of the Notification." In that case also, it was held that job worker is the manufacturer. 17.5 In the case of Shri Shankar Re-rolling Mills Pvt. Ltd. vs. CCE, Aurangabad reported in 1996 (88) ELT 270, this Tribunal has held that the important criteria to ascertain the role of the party as hired labourers, is to examine whether there exists a relationship of master and ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and shall not be covered fixtures and those items, therefore, they are not liable to pay duty on these items. Although the decision of the Hon'ble Supreme Court in the case of Craft Interiors (supra) is against the appellant, but in that case also, this Tribunal in remand proceedings held that extended period of limitation is not applicable as the issue of leviability of central excise duty on furniture is in nature of issue of interpretation. The same facts are in the case in hand, therefore we have no hesitation to say that in this case also, extended period of limitation is not invokable. 18.3 We further find that in the show cause notice there is no allegation against the appellant that the appellant has not paid the duty by way of willful misstatement or suppression of facts or having mala fide intention not to pay central excise duty in contravention of the provisions of the Central Excise Act/Rules. In these circumstances, again we hold that, as held by HMM Ltd. (supra), the extended period is not invokable, hence the demands raised in the show cause notice are barred by limitation. 19. As on both the issues the appellant succeeds, therefore we are now deciding the iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9; plea in para 17 of his order. I have carefully gone through the said submission as also the show cause notice and the impugned order. It is to be seen that during the investigation, statement of Shri N.D. Kularia was recorded and during this statement, he never mentioned about the existence of any sub-contractor and accepted that they are the manufacturer. However, after the issuance of show cause notice, appellant claimed sub-contractor. However, no details or copies of such agreement were produced. For the first time, they produced copies of agreements before this Tribunal. I have gone through the said agreements. All the six agreements are identically worded. Only the name of the sub-contractor is to be filled later on. The basic thing in an agreement of this type would be the scope of work or what the sub-contractor is expected to do. There is no such thing in the contract. The contract does not say which floor or what work is required to be done. I have also gone through the sample copies of the invoices produced by the appellant. It is seen from the sample copies that the subject itself talks of bill for carpentry labour charges. It is also seen from the details given in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e view that M/s. AFL Pvt. Ltd. cannot be considered as the manufacturer of the goods. Manufacturing or constructing barges is a very different industry compared to the work which was carried out in the present case. In the present case, the work carried out was of carpentry and the appellant has taken the contract from UTI and it is they who were responsible for everything to UTI. They are in the relevant business alone. They, in turn, hired the services of labour contractor who provided them carpenters and work was carried out. Calling the labour contractor or the carpenter who have charged only for their labour, a manufacturer will not be correct. In my view, it is very important that in each case, one has to examine what is the item being manufactured and what are the nature and practice for that item and keeping in view those facts, one can come to the conclusion who is the manufacturer. The facts of the case of AFL Pvt. Ltd. (supra) are not at all applicable in the present case. 23.1 In my view, the case of Bajaj Auto Ltd. vs. CCE reported in 1995 (80) ELT 644 (T), relied upon by the Revenue, is correct and in the present case, labour contractors were nothing but persons who ..... X X X X Extracts X X X X X X X X Extracts X X X X
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