TMI Blog1994 (11) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... es and at times having inlay work. Show cause notices were issued to the parties raising their liability of duty at the rate of 25%. The assessee had contended before the Assistant Collector that they bought the wood from the market. The same was cut to the required sizes from the saw mill. The cut wood was thereafter converted into articles of furnitures by using the aesthetic approach, imagination and skill by the craftsmen/carpenters with the help of hand tools like Aari, hathora sets, screw drivers, randha etc. The articles of furniture were then sold for furnishing houses, business houses and homes. The furniture produced by the craftsmen if required by the customers would have some carving or inlay work. The assessee also contended that in view of the process of manufacture the type of goods in its finished form essentially produced by hand of the craftsmen and the manner in which the craftsmen use their aesthetic approach, imagination and skill that such articles of furniture should fall under handicrafts. It was also argued that even the wooden furniture without being carved and inlay work was also handicraft. The assessee had cited excerpts from a number of books stated to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly with the aid of power with inlay decorative work can be considered as handicrafts. He referred to the definition of handicrafts as given in the ITC Policy and also dictionary meaning of handicrafts in Encyclopaedia of Britannica as under :- Occupations of making by hand usable products graced with visual appeal. Handicrafts encompass activities that require a broad range of skill and equipment, including needle work, lace making, weaving, printed textile decoration, basketry, pottery, ornamental, metal making, jewellery, leather working, wood working, glass blowing and the making of stained glass. He pleaded that the respondents had used the following machinery for manufacture :- (i)Saw mill for cutting logs (ii) Hand tools (iii)Spray painting with electric operated compressor (iv)lectric grinder (v)Power sander and electric grinding wheel for cutting mother of pearls. In the case of M/s. Continental Furnishers sand paper machine and lathe are being used. He referred to the statement of Shri Ashok Bajaj of Louis Shoppe and John Samuel of Continental Furnishers. He referred to the Import Export Policy, 1983-84 Appendix 9. He referred to the Profile of New Zeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture and also referred to wood carving i.e. inlay work and no machine can do its work and these are assembled manually. He referred to the classification list which appears on page 23 of the paper book in the case of Continental Furnishers. He referred to the order-in-original which appears on page 12 of the paper book. He pleaded that the mere fact that power was used at a particular stage will not take away the benefit. He argued that there are two notifications viz. Notifications No. 230/86, dated 3rd April, 1986 and No. 76/86-C.E., dated 10th February, 1986 and the later notification is in dispute and use of power at a particular stage cannot have the effect of denying the benefit of the notification. He referred to the submissions made at the times of personal hearing before the Assistant Collector. In reply to the show cause notice, he referred to page 20 of the paper-book where it was contended by the respondent before the Assistant Collector as under :- From the above decisions it would be seen that wood working has been treated as handicraft. It may be submitted that the wooden furniture made from the cuttings of wood acquire their shape by the hand-made aspect of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cise, Guntur v. Ambica Chemcial Products, reported in 1992 (60) E.L.T. 656 (Tri.) = 1990 (31) E.C.R. 51 and also referred to pages 36 and 37 of the paper-book i.e. International Trade Centre UNCTAD/GATT. Relevant extract from page 37 is reproduced below :- Some goods may be produced partly by machine and partly by hand (e.g. a dress made up by hand from machine-made cloth, perhaps with additional hand embroidery or other decoration). . . . . in such cases a product should be regarded as `hand-made or `handicraft if the essential character of the product in its finished form is derived from the `hand-made aspect of its production. He also referred to craft designs of All India Handicrafts Board and referred to pages 38, 39, 40 and 46. On page 40 there is a photograph of Divan-cum-Settee. At page 46 there is a photograph of Sankheda lacquerware from Gujarat and laid table top from Saharanpur. On page 96 appears advertisement of Phulkari i.e. Wood inlaid Furniture and on page 95 appears the photograph from Suraj Kund Crafts Mela of Furniture. He argued that the respondents are entitled to the benefit of Notification No. 76/86-C.E. and pleaded for the rejection of the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ples of wood on which the process of inlay/carving had to be undertaken and which showed that the required designs were first drawn on the paper and which was pasted on the wood. (vi) The inlay work on wood is an embroidery on the wood and the materials used for inlaying are mother of pearls, copper and brass wire etc. The pieces of copper, mother of pearls are taken. Before inserting the same into the wood with the aid of small hand tools that scratching on the already drawn outlines is undertaken on the wood by chiesel and hammer. It is on such created surface on the wood that the pieces of copper, brass wire, mother of pearls etc. are inserted manually. This requires the skill of the craftsmen and use of skilful hands. In case of carving it is once again that outline is drawn on the wood and it is by use of chiesel and hammer, operated manually, that different designs are made on the wood." The learned Senior Departmental Representative, Shri R.K. Kapoor in his written arguments has mentioned the process of manufacture of furniture items as per statement of Shri Ashok Bajaj of Loui Shoppe as under :- The machines used are saw mill for cutting logs of wood in proper shap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound. Of late, plastic inlay has also crept in the area to substitute ivory. A wide range of articles are made by the inlay workers at Mysore among which may be mentioned panels, trays, teapoys, plates, boxes, powder bowls and cigarette cases besides the Dussehra pageantry, landscapes and pastoral scenes." Delhi State Industrial Development Corporation in the Report on the Survey of Handicrafts in Delhi which appears on pages 51 to 71 has written about the process of manufacture as under :- Woodwork in Delhi comprises of the manufacture of furnitures, decorative articles and small articles like ball pens, agarbati stands etc. Carving is necessary only in the manufacture of decorative articles. Further, the logs of wood are cut into pieces of required length with the help of hand saw or a mechanised saw. The use of the hand saw for the cutting requires a much physical labour and time. Thereafter the block of wood is further split into requisite girth with the help of a hammer and chisel. However, skilfully the artisans may split the wood, the girth does not remain uniform for all pieces. It is likely to vary from piece to piece; cutting is followed by the cleaning edges wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ftsmen who use their aesthetic approach, imagination and skill that the respondents while filing their classification list claimed them as handicrafts and further claimed exemption under Notification No. 76/86. Such classifications have been filed from pages 22 to 30 in the combined paper book of M/s. Continental Furnishers and also in a small paper book filed in the case of Loui Shoppe where in the remarks column it has been explained that the items of wooden furniture are made by skilful use of hands by the craftsmen. Notification No. 76/86-C.E., dated 10th February, 1986 supersedes Notification No. 234/82. The scheme of the Central Excise Tariff Act has been that the Central Govt. had issued two types of notifications. For the goods manufactured without the aid of power and exempted from Central Excise Duty that Notification No. 230/86, dated 3rd April, 1986 had been issued and Notification No. 76/86 includes handicrafts, cover the goods irrespective of the process of manufacture involved i.e. even with the aid of power. Such scheme also appeared even prior to coming into operation of the Central Excise Tariff Act, 1985. The Departmental Representatives, on the other hand, has r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statute, the exemption therefrom is to be construed strictly but the strictness of the construction of exemption notification should not be given by any circuitous process of interpretation. After all exemption notifications are meant to be implemented. Relevant extract from para 20 is reproduced below :- ****** Hon ble Supreme Court in the case of Collector of Central Excise v. Parle Exports (P) Ltd., reported in 1988 (38) E.L.T. 741 (S.C.) on page 748 in para 11 had held as under : ***** The Tribunal in the case of Collector of Customs v. Delhi Tubes Pvt. Ltd. reported in 1990 (49) E.L.T. 243 [Paras 15 25] had held as under :- ****** For the proper appreciation as to the extension of benefit of Notification No. 76/86, dated 10th February, 1986 the same is reproduced below :- EXEMPTION TO ARTICLES OF ERSTWHILE TARIFF ITEM 68. In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944 and in supersession of the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 234/82-Central Excises, dated the 1st November, 1982, the Central Government hereby exempts goods of the description speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made aspect. The goods may be produced partly by use of hand and partly by use of machines but this can be considered as handicrafts only if the product acquires its essential character in the finished form by use of hand. The use of the machine in the manufacture of a product does not preclude an article from the category of handicraft when essential character of that product is shaped by use of hand. In the article `The Vital Role of All India Handicrafts Board appearing on page 151 of the paper book, the Board has written as under :- The All India Handicrafts Board was set up in 1952 to advise the Central Government on problems of handicraft industries and suggest measures for their improvement and development. The Board is also required to study technical marketing, financial and organisational aspects of handicrafts and formulate plans for their development and assist State Governments in preparing and executing developmental schemes. The Board has been reconstituted by the Government from time to time. The latest reconstitution was done in July, 1974 for a period of three years. The All India Handicrafts Board has a vital role in formulating necessary plans directed ..... X X X X Extracts X X X X X X X X Extracts X X X X
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