TMI Blog2013 (12) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... s V. M. SALGAONCAR & BROS. (P) LTD. [1998 (3) TMI 134 - SUPREME COURT OF INDIA] - Tugs and barges used by the appellants are sea going vessels - the question whether a transhipping vessel is an ocean-going vessel, can solely rest on the test of its dominant use to which their owners put them at times - Use may vary from season to season, port to port and also managers to managers - So in this area of understanding use of the article stands down-staged, and the Court must look at to know what actually the commodity is - The affidavit of Shri Arun Kapur, Naval Architect which clearly confirms that the tugs and barges in question are ocean going vessels which are not controverted or cross-examined by the Revenue - the tugs and barges are ocean going vessels and the appellants are entitled for the benefit of exemption – Decided in favour of assessee. - E/3029/2004-Mum - Final Order No. A/488/2013-WZB/C-II(EB) - Dated:- 4-6-2013 - Shri Ashok Jindal and P.K. Jain, JJ. Shri J. Pochkhanwala, Sr. Advocate with M.H. Patil, Advocate, for the Appellant. Shri Navneet, Addl. Commissioner (AR), for the Respondent. ORDER The appellant is in appeal against the following order :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AMC Marcons also contemplates that the said goods should be constructed as sea going vessels. On the basis of the above, the appellants entered into an agreement dated 15-9-1986 with M/s. Raigad whereby M/s. Raigad was required to manufacture the said goods as per the designs and specifications of the appellants as job contractors. The said agreement is on principal to principal basis. The appellants acted as M/s. Raigad s representative that it had expertise in shipbuilding. The appellants and M/s. Raigad are completely separate legal entities. The appellants have not provided any financial assistance to M/s. Raigad. The appellants provided only raw materials i.e. basic steel and other essential items required to be placed on board tugs to M/s. Raigad. M/s. Raigad is not a dummy of the appellants. The appellants hired BPT premises as indicated to them by M/s. Raigad. M/s. Raigad used its own expertise, its own electricity, its own equipment and machinery like generators, transformers, cutting, welding, grinding equipment, all to be run with the aid of power, cables and tools as well as its own labourers to manufacture the said goods. Therefore, M/s. Raigad did not merely provide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to M/s. Raigad generators and welding machines for manufacturing the said goods who has also produced the vouchers and bills in respect of the hiring of the said machinery in the name of M/s. Raigad for the manufacture of the said goods. Therefore, he submits that M/s. Raigad cannot be termed as labour supplier. In fact, M/s. Raigad were experts in building of ships and vessels and they were job work contractors. As contractors, M/s. Raigad provided all the requisite machinery electricity and labour. Therefore, M/s. Raigad is the manufacturer of the said goods not the appellants. 7.3 The learned Advocate also relied on the Board s Circular No. 56/56/94-CX., dated 14-9-1994 which indicates that under such parameters the job worker is the manufacturer of the excisable goods. He further submits that the Board s Circular is binding on the adjudicating authority. 7.4 The learned Advocate further relied on the following case law :- 1. Kerala State Electricity Board - 1990 (47) E.L.T. 62 (T). 1.1 Upheld by Hon ble Supreme Court - 1990 (47) E.L.T. A161 2. Super Printers - 1987 (30) E.L.T. 745 (T) 2.1 Upheld by Supreme Court - 1985 (80) E.L.T. A275 3. Taggas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ater ways. As per the contract entered into between Indo Gulf and N.S. Guzder Co. Pvt. Ltd. which clearly contemplates sea going voyages. The copy of the appellants letter to AMC Marcons which contemplates sea going voyages. He further submitted that as per the Certificate issued by the Indian Registrar of Shipping which contemplates sea going voyage upto 15 Nautical miles and the vessels are registered with the characters SU which is the registration for sea going voyages. He further relied on the affidavit of the expert Naval Architect Shri Arun Kapur which describes in detail how a vessel can be called a sea going vessel by its conception and construction. Shri Kapur has declared unequivocally that the said barges and tugs manufactured by M/s. Raigad for the appellants are sea going vessels. Shri Kapur was not at all cross-examined by the department; despite this his affidavit was not given any weightage in the impugned order. No contrary technical evidence was produced at any stage by the department to counter the affidavit of the expert Naval Architect Shri Arun Kapur. It was further submitted that tugs and barges are Ocean Going Vessels only as per the Trade Notice No. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld that the said goods are not sea going vessels therefore, the appellants are not entitled for the benefit of notifications relied upon by them. 10. Considered the submissions made by both sides and perused the case law relied on by them. 11. There are two issues before us :- (a) As per the terms and conditions of the agreement dated 15-9-1985 whether M/s. Raigad is the manufacturer or the appellants are the manufacturer. (b) If the appellants are the manufacturer then whether they are entitled for the benefit of exemption notification relied on by the appellants or not. 12. To deal with the first issue, we have to see the terms of agreement. As per Clause 1 of the agreement, M/s. Raigad as job contractor to provide the requisite and necessary labour force for building the said goods. Clause 2 of the agreement says that the appellant shall supply all materials to M/s. Raigad. Clause 4 of the agreement says that the payment for the work done by M/s. Raigad shall be made at Rs.9,000/- per ton inclusive of consumables. As per Clause 10, taxes local or central, if any, shall be borne by the appellants. Plain reading of the agreement, as per Clause 1, M/s. Raigad was a jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abrication was being done by the contractors as per the design and drawings of the appellants cannot be made a ground for holding that it is the appellants who had fabricated the goods. Therefore, it was held that the appellant cannot be held as a manufacturer. Same view was taken by the Tribunal in the case of Kerala State Electricity Board (supra) which has been upheld by the Hon ble Apex Court and in the case of M.M. Khambatwala (supra) the Hon ble Supreme Court held that the assess having paid wages to the house-hold ladies for manufacturing agarbatti, amlapodi and dhup etc. It was the contention of the assessee that the goods manufactured by such house-hold ladies though in their own premises must be taken as manufactured in the factory of the assessee. It is not in dispute that levy of excise duty is attracted on the incident of manufacture. Wherein in that case the Hon ble Apex Court held that the assessee cannot be considered as manufacturers of agarbatti, amiapodi and dhup etc. manufactured in the premises of house-hold ladies as described above without the aid of power. The undisputed facts are that the respondents supplied raw materials for rolling incense sticks etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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