TMI Blog1983 (10) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... hereinafter referred to as IMP ) to fabricate and assemble HT and LT distribution transformers from the raw materials/components supplied to them by IMP. The transformers were to be assembled according to the specifications/design of IMP and under their direct supervision and control. For this purpose the appellants were allotted an area on the ground floor of the factory of IMP where they were to assemble transformers only for IMP. The appellants were prohibited from assembling transformers or any other article for others. On the introduction of Item 68 the appellants filed a classification list under that Item and started paying duty on the job charges collected by them from IMP, invoking Notification No. 119/75-C.E., dated 30-4-1975, which provided for payment of duty on job charges. Later, the appellants sought permission to remove the transformers from their factory without payment of duty under Notification No. 118/75-C.E., dated 30-4-1975, which exempted goods falling under Item 68, manufactured in a factory and intended for use in the factory in which they are manufactured, or in any other factory of the same manufacturer. This permission was granted on 15-6-1976. Subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f this contract, the testing, painting and packing of the transformers was to be done by IMP with its own workmen. Under Clause 2 the fabrication would be in the manner as directed by IMP and under their direct supervision and control. Under Clause 4 the appellants were precluded from using the premises allotted to them in IMP s factory for the manufacture of the appellants own products. Nor could they manufacture or fabricate goods for any other person without the permission of IMP. 7. Shri D Souza referred to the definition of employees under the Industries Disputes Act and sought to rely on a number of decisions of the Supreme Court under that Act. According to him, the appellants had to be regarded as employees of IMP and not manufacturers in their own right. 8. On the question whether the transformers as fabricated by the appellant s were excisable goods , Shri D Souza submitted that the transformers were supplied only to the Electricity Boards of various States. It was invariably a condition of the contract with the Electricity Boards that a certificate should be produced from a recognised laboratory to the effect that the transformers conformed to the relevant ISI ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppression, etc., and only the normal time limit under Rule 10 (which at the relevant time was six months) could be invoked. If this time limit were applied, two out of the four demands would be fully time-barred, while one would be partly time-barred and only one would be within time. 13. For the Department, Shri Tayal argued that the appellants were definitely manufacturing transformers. He referred to Clause 6 of the contract, in which it was provided that the appellants should register the premises allotted to them as their factory under the Factories Act, 1948 and should obtain in their own name all permits and licences required under the law for carrying on the activity of fabricating the transformers. He also referred to Clause 9 of the contract in which it was laid down that all servants, workmen and other employees employed by the appellants should be employed by them on their own account and should be deemed to be the employees of the appellants. IMP were to be indemnified against any claims, demands, etc., from the employees of the appellants. 14. Shri Tayal therefore submitted that the contract was only intended to protect the trade name of IMP, by ensuring the qua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the case of Madura Coats Ltd., cited by Shri D Souza was not on all fours with the present case. 17. As regards Shri D Souza s submission that duty was sought to be demanded on the basis of the value at which the transformers were sold by IMP after further processing, and on the point that duty was again charged on the transformers at the stage of clearance by IMP, Shri Tayal submitted that there was nothing on record to substantiate these contentions. (As will be mentioned later, there are definite indications in the orders of the authorities below regarding the latter point). 18. Shri Tayal also contested the argument of Shri D Souza that the demands were wholly or partly time barred. For reasons which will appear later, his arguments on this aspect need not be referred to in detail. 19. We have carefully considered the arguments advanced on both sides. We observe that in this case the appellants contend that they are not independent manufacturers, but only `hired labour . As against this, the terms of the contract between the appellants and IMP show that IMP had a financial involvement as well as close supervision and control over the fabrication of the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eking to recover full duty from the appellants before these processes are carried out. It has no where been contended that what the appellants fabricate and what IMP sell are different commodities. In this connection the following extract from the Appellate Collector s order would be relevant :- Here, however, the appellants have argued that that they do not manufacture transformers in complete form inasmuch as the process of testing, finishing and painting, etc. is done by the IMP. No doubt, the later processes are incidental or ancillary to the completion of manufacture of excisable goods i.e. transformers but nevertheless it cannot be said that transformers as much (sic) were not manufactured by the appellants. It is only that some further processes are to be carried by the IMP. Thus, according to the Appellate Collector what the appellants were held to have manufactured were transformers. The `completed goods after further processing are also called transformers. The Department does not appear to have seen any incongruity in seeking to recover duty twice over on what are substantially the same goods and going under the same description. It is true that the Tariff Item ..... X X X X Extracts X X X X X X X X Extracts X X X X
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