TMI Blog1991 (10) TMI 142X X X X Extracts X X X X X X X X Extracts X X X X ..... ant herein is Chief Administrator Command Area Development Authority, Aurangabad who has challenged the same Order-in-Original No. 13/88 dated 29-5-1988 confirming the above noted demand. 2. The show cause notice dated 29-4-1987 was issued by the Collector of Central Excise dated 29-4-1987 to the Chief Engineer Irrigation Department Jayakwadi Project Aurangabad and to Chief Administrator Command Area Development Authority, Aurangabad. The reply to the show cause notice has been given by the Superintending Engineer on behalf of Chief Engineer. Chief Administrative Officer also has given separate reply to the show cause notice. The order-in-original No. 13/90 on page-1 in cause title shows the name of the Party as M/s. Chief Engineer Irrigation Deptt. Jayakwadi, Aurangabad and Others and on the last page the copy of the order is marked to Superintending Engineer and to the Chief Administrative Officer. The final demand is confirmed against Irrigation Deptt. of Jayakwadi Project Aurangabad and Command Area Development Authority, Aurangabad of Govt. of Maharashtra. The Supdt. Engineer and Chief Administrative Officer have separately filed the above appeals against the impugned order. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contended that the goods were used for the bona fide Govt. work of providing and constructing canal lining. Casting of PCC slabs is one of the intermediate stage in the process. The PCC slabs were being cast at different work places wherever it is required for canal lining and does not require power for its casting and incidental to ordinary functions of the Govt. They contended that they were not manufacturing Excisable goods and hence paying of duty did not arise. As such question of delivering it from factory under the gate pass in proper form did not arise. Similarly, removal of goods on which duty has been determined also does not arise under Rule 173C(2). They contended that measurements of work done is taken for the finished item after laying and finishing in position and paid on M2 (sq. metre) basis and no separate account of PCC slabs manufactured etc. were therefor kept. The PCC slabs were not cast for sale and they could not produce price list nor there was a question of obtaining trade discount on it. They contended that keeping account according to Rule 173Q of Central Excise Rules, 1944 did not arise for the purpose of casting PCC slabs. (iii) They contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 2(m) of the said Act, as they had not filed any material to substantiate their claim. He held that project works such as construction of canals or laying of irrigation pipelines etc. are the works of permanent nature spread over a long period and the irrigation department manufactures the cement products required for the said work on permanent basis. The value of the goods manufactured during the period was over rupees one crore and the manufacturing operations were carried on from 1982-86 for a period over four years and hence were not of temporary nature. The learned Collector, therefore, held that they were not entitled to the benefit of Notification No. 46/81. (ii) He rejected the appellants plea that contractors were manufacturers on the ground that the land was provided by the party for undertaking manufacturing operations. Even the raw materials, machinery, power etc. was also provided by the Party and the supervision over the manufacture was done by the party through their officials. He held that all these evidences goes to prove that the goods were manufactured at site. On the account of and on behalf of, as well as, for the party and the contractors simply carrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. (ii) The appellants are not the manufacturers but the contractor is the manufacturer. (iii) There is no suppression and hence the demand is hit by limitation. (iv) Show Cause Notice should have been served on Secretary to the Irrigation Department and the service on the Supdt. is not maintainable. 10. On the first point, he elaborated that the Contractor carries out the work to make the slabs in open site and the slabs are cured in tank. The work spot keeps changing and hence temporary open land cannot be considered as factory. He contended that the production of goods was the independent activity of the contractor to make the concrete slabs. Although there cannot be dispute of manufacture and dutiability of the goods under T.I. 68 of the erstwhile Tariff and also with regard to use of electricity and employment of more than 10 workers but the activity carried on in open site on temporary basis cannot be construed as factory within the meaning of definition of factory under Section 2(m) of the Factories Act, 1948. As such type of activity are carried on in hundreds of places by several contractors. There is no permanency of a place to be called a factory premises . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir contention that Contractors were manufacturers, as the appellants were charging for all these facilities. 14. As regards the third point, he contended that there was no deliberate intention to evade duty. He contended that department had not placed any positive evidence regarding suppression and relied on the ruling of the Supreme Court as rendered in the case of Padmini Products v. CCE as reported in 1989 (43) E.L.T. 195 (SC). 15. As regards the fourth point he contended that under the Excises and Salt Act, 1944, duty has to be charged against the Secretary to Govt. and Supdt. Engineer is not the proper person to be proceeded against. 16. Shri J.N. Nair, learned JDR appearing for the department defended the impugned order and submitted that there was no infirmity in the order and the same was maintainable. He contended that the appellant had not denied the manufacturing activity or regarding the production of goods or its classification. The activity was carried on a site which was owned by appellant and the activity went on for a period of four years and hence it cannot be termed as temporary place. He contended that appellant had not placed any evidence of their not ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss for - (i) making, altering, repairing, ornamenting, finishing, packing, oiling, washing, cleaning, breaking up, demolishing, or otherwise treating or adapting any article or substance with a view to its use, sale, transport, delivery or disposal; or (ii) pumping oil, water, sewage or any other substance; or (iii) generating, transforming or transmitting power; or (iv) composing types for printing, printing by letter press, lithography, photogravure or other similar process or bookbinding; or (v) constructing, reconstructing, repairing, refitting, finishing or breaking up ships or vessels; or (vi) preserving or storing any article in cold storage; (m) factory means any premises including the precincts thereof - (i) whereon ten or more workers are working; or were working on any day of the preceding twelve months and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) whereon twenty or more workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process, is being carried on without the aid of power, or is ordinarily so carr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same word as used in the definition of the term factory in this very Act, clause (m) of S. 2, Factories Act, 1948, defines factory as follows : (m) Factory means any premises including the precincts thereof - (i) whereon ten or more workers are working or were working on any day of the preceding twelve months, and in any part of which a manufacturing process is being carried on with the aid of power, or is ordinarily so carried on, or (ii) It is undisputed that the manufacturing process in a sugar factory is carried on only during the crushing season which is also the period during which the factory employs 500 or more workers. Under the first portion defining a factor , the premises would be a factor only for the period during which the manufacturing process is actually being carried on with the aid of power; for the period during which the manufacturing process is not actually carried on, the premises can be a factor only under the second portion of the definition which makes the premises a factory if the manufacturing process is ordinarily carried on with the aid of power in these premises. It cannot be said that merely because no manufacturing process is car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ries like sugar factories, therefore, fails." 23. The Madras High Court in re: Chinniah Manager, Sangu Soap Works as reported in AIR 1957 Mad. 755. while interpreting the Section 2(m)(ii) and Section 2(k) of the Factories Act held in para 4 as follows: As is plain from the definition the whole premises are a factory even though the manufacturing process is being carried on only in a part of the premises. In Ramanatham v. Emperor - ILR 50 Mad. 834: (AIR 1927 Mad. 345) (A), the words manufacturing process" do not necessarily refer to something produced but to the business carried on: Owner v. Cottingham Sanitary Steam Laundry Co. Ltd. 1910-74 JP 219 (B). Thus, a laundry carried on for the purpose of gain and in which mechanical power is used for driving machine used in aid of the work of washing clothes is within the definition of a factory. The conversion of raw film into finished product comes within this definition of the section: In re: Sarma, AIR 1953 Mad. 269 (C). Putting ginned cloth into bales and having it pressed in the compound of the factory is a work incidental to or connected with manufacturing process within the meaning of the Act: Local Government v. Nusarwan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before Hon ble Supreme Court of India as reported in AIR 1962 (page 29). The Hon ble Supreme Court after examining the definition of Factory and manufacturing process in the Factories Act answered the question in Paras (5), (6) and (7) of the report as follows : It is contended for the appellant that the expression premises in the definition of the word factory means buildings and that mere open land is not covered by the word premises and as there are no buildings except temporary sheds on the Salt Works, the Salt Works cannot be said to be a factory . We do not agree with this contention. The word premises has now come to refer to either land or buildings or to both depending on the context. The meaning of the word premises in various lexicons and dictionaries are given below: (a) Wharton s Law Lexicon: Premises is often used as meaning land or houses . (b) Cochran s Law Lexicon, IV Edition : Premises means houses or lands . (c) Black, H.C. Law Dictionary, IV Edition : Premises as used in the estates means - (i) lands and tenements; an estate; land and buildings thereon; the subject-matter of the conveyance; (ii) a distinct and definite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsection (1) of S. 93 reads : Where in any premises separate buildings are leased to different occupiers for use as separate factories, the owner of the premises shall be responsible for the provision and maintenance of common facilities and services, such as approach roads, drainage, water supply, lighting and sanitation. This again makes it clear that premises refer to an entire area which may have within it several separate buildings. 25. Shri V. Sridharan, learned Advocate has relied on two rulings in his support. One is Aruna Industries (supra) and the other is of the Gujarat High Court as rendered on Engineer Construction Corporation Ltd. v. S. Patel Factory, Inspector (Crime Rev. 267/78). 26. In Aruna Industries case the Tribunal held that the making of structural shapes like trusses, beams, girders etc. from raw materials such as plates, channels, angles by cutting, drilling rivetting etc. and assembling structural shapes for construction of a building or shed was a fabrication activity and not a manufacturing process. The Tribunal relying on the Engineering Construction Corporation case of Gujarat High Court held that fabricating activity on a site allotted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs, use of power and manufacturing activity is not disputed. It is their case that the cement yard being an open site will not come within the words premises . This word premises has been held as noted in Case Law discussed above to include even open yard . The above noted rulings have gone into similar question raised regarding the seasonal nature of the work and also being temporary in nature and has negatived such contentions. The rulings noted by us, apply in full force. Applying the ratio of the rulings, the contentions raised regarding the activity of manufacturing process of manufacturing cement goods does not come within the term factory has to be ruled out. 27. The second question raised is can the demands be confirmed on the appellants ? The appellants have contended that they are not the manufacturer but it is the Contractor, being a job worker is the manufacturer and hence duty cannot be confirmed on them. In this connection reliance is placed on the rulings given by Tribunal in the ratio of the Kerala State Electricity Board s case (supra). The Tribunal had examined the terms of contract and has held that the agreement is in the nature of principal to princ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng exemption under the said notification. This view of the learned Collector is supported by ruling of this Bench rendered in the case of Andhra Pradesh State Electricity Board, Hyderabad v. CCE, Hyderabad as reported in 1984 (16) E.L.T. 579. 29. The learned Counsel has not shown any ruling against this finding of the learned Collector. There is no infirmity in this portion of the finding. The Chief Engineer of each division is acting on behalf of the Irrigation department and the duty has been confirmed on the Irrigation department. The Chief Engineer has represented the department. The Cement Yard is controlled and held by the Irrigation department for the Govt. of Maharashtra. Therefore, the appellants cannot plead that each yard has a separate manufacturer who is independent in all aspects. The learned Collector has rightly rejected this plea of the appellants. 30. The duty confirmed is for five years invoking larger period. The learned Collector has relied on the rulings of the Tribunal rendered in the case of VST Tillers and Tractors (supra) and that of Kiran Spinning Mills (supra). Shri Sridharan relied on the ruling of the Supreme Court as rendered in Padmini Products ..... X X X X Extracts X X X X X X X X Extracts X X X X
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