TMI Blog2015 (3) TMI 826X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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. - Decided in favour of assessee. - Appeal No. E/1342 to 1344/2000-Mum - - - Dated:- 12-2-2015 - Ashok Jindal And P. K. Jain,JJ. For the Appellant : Shri S S Gupta, CA For the Respondent : Shri Rakesh Goyal, Additional Commissioner (AR) ORDER Per: Ashok Jindal: The appellants are in appeals against the impugned order. Initially the appeals were dismissed for non-prosecution by this Tribunal, but on appeal, the Hon'ble High Court of Bombay remanded the matter back to this Tribunal, vide order dated 15.9.2014 for consideration of the appeals on merits. Therefore, these appeals are taken up for consideration. 2. The learned consultant appearing on behalf of the appellants submits that one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these facts in the knowledge of the department. If their activity is termed as manufacture of furniture, then the sub-contractor is liable to pay duty on the furniture manufactured by the sub-contractor. To support this contention, he relied on the agreements between the appellants and sub-contractors, invoices raised by the sub-contractor and TDS certificates of the sub-contractors certifying the activity carried out by the sub-contractors. Therefore, he submitted that, as held by this Tribunal in the case of AFL Pvt. Ltd. reported in 2013 (295) ELT 211 (Tri. - Mumbai), the appellant is not a manufacturer. Therefore, they are not liable to pay duty. The appellants relied upon the decisions in the case of Basant Industries reported in 1995 (75) ELT 21 (SC) and in the case of Shri Shankar Re-rolling Mills P. Ltd. reported in 1996 (88) ELT 270 (T). He also contended that the case laws relied upon by the learned Commissioner are not applicable to the facts of the case in hand. 6. The learned consultant also submitted that the show cause notice has been issued on 3 rd February 1998 for the period June 1995 to October 1995 by invoking extended period. The same is not sustainable and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... movable and non-excisable and exempted goods. The taxability on the furniture has been decided by the Hon'ble Supreme Court in the case of Craft Interior referred to hereinabove and on the basis of the said guidelines laid down by the said decision, most of the items manufactured by the appellant/sub-contractor are in nature of fittings and fixtures and which cannot be removed without cannibalizing. Therefore, in these circumstances, the entire amount of duty is not sustainable and the demand is to be re-quantified giving the benefit of cum duty price. If the same is taken into consideration, the demand will go down drastically. Therefore, the impugned order is required to be set aside. 8. He further submits that the provisions of Section 11AB to impose interest were inserted by the Finance Act, 1996 are effective from 28 th September 1996 and as per the provisions of Section 11AB shall not apply to the cases where duty became payable before the date on which the Finance Bill, 1996 received the assent of the President. Admittedly, in this case the period is prior to that. Therefore, the appellant is not required to pay interest as held by this Tribunal in the case of M.P. Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant was the manufacturer and the sub-contractor was only a labour contractor. He also doubted on the existence of the contracts on the ground that all the contracts produced herein are exactly the same. Only the names and addresses are filled by ink pen and others are almost same. Therefore, these contracts/agreements cannot be relied upon. In these circumstances, he prayed that it is to be held that the appellant is the manufacturer. 12. In the defence of extended period, he submitted that the learned consultant has relied on the decision of Louis Shoppe of this Tribunal and the said decision was set aside by the Hon'ble Supreme Court on 12.3.1995 as reported in 1996 (83) ELT 13 (SC). The decision in the case of Louis Shoppe dealt with decorative charis and sofas having inlay work with carving of Indian classical patterns and motives and made using skilful use of hands. The furniture in consideration have no relevance to the furniture in the case of Louis Shoppe. In the statement also, Shri Kularia submitted that they were under confusion whether duty is leviable on the furniture item made by them or not as other furniture makers are not paying duty. But Shri Kularia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he show cause notice, which is reproduced here as under:- 20. According to the agreement made by us with these contractors, our relation with them was on principal to principal basis. We did not control over the workers of these contractors. These contractors did not work as our labours/employees nor were we their masters. We has no right to control these contractors over their method, to achieve the result. These contractors are the real manufacturers. The investigating officers did not contact any of these contractors to find out our relationship with them. In absence of any evidence that these contractors, were dummies, shams or facades, there would be no justification in demanding duty from us for the goods, manufactured by these contractors. 21. The Hon. Supreme Court has repeatedly declared the law that it would be the job worker in whose hands the taxable commodity emerged, would be the real manufacturer and would be liable to the payment of excise duty. 23. Further, according to the agreements, we had with these contractors, the jobs were to be completed by them (contractors), in accordance with the specifications given in the tender and programmes drawn up jointl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot 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, amlapodi 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. to outside manufacturers and paid wages to them on the basis of number of pieces manufactured. Such manufacture was without the aid of power. There was no supervision over the manufacture. Incense sticks were put in packets and such packets were sold from the premises of the house-hold ladies and they did not go to the factory -premises of the assessee. No doubt the sale proceeds went to the respondents but that will not change the character of manufacture. If the conclusion is that the house-hold ladies were the real manufacturers then the decision of the Tribunal cannot be faulted. In the case before us, although the said goods were manufactured by M/s Raigad at the premises hired by the appellant from BPT that the machineries of M/s Raigad under the supervision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n dispute. Therefore, it was not entitled to exemption unless the value of pumps manufactured by different parties under the agreement was excluded from its clearance. The appellant did not dispute that it supplied castings, pump tape, shafts, impeller etc. to the manufacturer. The question, therefore, that arose was whether the pumps brought out of all this resulted in manufacture. This word was explained by the Constitution Bench in M/s. Ujagar Prints Ors. v. Union of India Ors. - 1988 (38) E.L.T. 535 (SC) = 1989 (3) SCC 488 . It was held that the test to determine leviability under the Act is whether a new commercial commodity has emerged. Since the goods which were manufactured by different units on raw material supplied by the appellant was a new commercial commodity it cannot be said that it did not amount to manufacture. And that was not the dispute in the show cause notice which called upon the appellant to explain as to why the duty may not be levied on it as it was manufactured on its behalf. The ambit of controversy thus was not so much whether pumps were manufactured by different parties but whether it was manufacture on appellant's behalf. The Tribunal in this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore, exempted from levy of duty. Although the said decision was reversed by the apex court in 1995 but the same was reported in 1996, by that time the appellant was under bona fide belief that during the impugned period the furniture manufactured by them or the work undertaken by them is exempt from levy of duty of excise. Further, the learned AR relied on the statement of Shri N.D. Kularia who has categorically made a statement that they presumed that they were not required to pay duty on these items, but as advised by the department, he admitted that if it is manufactured, it is chargeable to central excise duty and in that circumstances, he paid a sum of ₹ 15 lakhs. But it does not mean that he had an intention not to pay duty and he was having knowledge that the item is chargeable to central excise duty. 18.1 Further, we find that in the case of Jay Arts (supra), this Tribunal has held that the show cause notice is hit by limitation as demand has been raised by invoking the extended period of limitation. Admittedly, the facts of this case are similar to the case of Jay Arts (supra). Therefore, as held by this Tribunal in the case of Jay Arts (supra), extended period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments Ltd., - 2001 (128) E.L.T. 52 (S.C.). 19.2 Further, we find that in the show cause notice it is not alleged that which clause has been contravened by the appellant of Rule 173Q of the Central Excise Rules, 1944. Therefore, penalty under the said Rule is not imposable as held by the Hon'ble Supreme Court in the case of Amrit Foods (supra). 19.3 We further find that there is a personal penalty on Shri N.D. Kularia of ₹ 3,00,000/- under Rule 209A of the Central Excise Rules, 1944. The penalty on Shri Kularia is not warranted as per the decision of this Tribunal in the case of Pravin N. Shah (supra) wherein it has been held that when penalty on firm has been levied, there is no requirement to levy separate penalty on the proprietor/partner of the firm. 20. With these observations, we hold that the demand confirmed in the impugned order is not sustainable. Consequently, interest and penalty on the appellant and penalty on the co-appellant are also not sustainable. The appeals are allowed with consequential relief. (Pronounced in Court on __.12.2014) 21. I have gone through the order recorded by my learned brother. However, my views on the first issue are a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n able to demonstrate how the work which was assigned to them by UTI was sub-divided by them into six sub-contractors and how the sub-contractors were their masters and the appellant had no role during the execution of the work. In fact, the various invoices produced indicate that the invoices are from labour contractors and are for carpentry labour charges . I also note that a very relevant point which was pointed out by the learned AR during the argument that para 2(c) of the purported agreement indicates that the negotiated rates include expenses of goods, travel etc., which itself indicate that this is a contract of supply of labour. Under the circumstances, I am of the view that the sub-contractors were nothing but hired labourers and the appellant was the manufacturer of the goods. 23. My learned brother has relied upon the decision of this Tribunal in the case of AFL Pvt. Ltd. vs. CCE, Mumbai-II reported in 2013 (295) ELT 211. In that case, the facts were very different. The item involved was the seagoing vessel, viz. barges. The appellant, M/s. AFL Pvt. Ltd., was not in the business of either manufacturing or repairing of any seagoing vessel but was in the business of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal has taken the view that important criteria to ascertain the role of party as hired labourer is to examine whether there exists a relationship of master and servant between them, which implies that labour is under contract and supervision of the party who hires them. In this case, the appellant has never claimed during investigation anything about the sub-contractor and it is a bald statement made later on that they have engaged the sub-contractor. As mentioned earlier, the invoices indicate charges for fixing of locks and various other items. These works are invariably carried out under the supervision of the master. Obviously, the locks have been provided by the appellant. The doors have been provided by the appellant and they would have specified the fixing of such lock or door closer or other items. In these circumstances, one cannot say that the so called as sub-contractors were working independently and worked as master themselves. 24. In my view, in the facts and circumstances of the case, particularly when the agreements were not produced during the investigation and the agreements produced before the Tribunal do not even speak anything about the scope of the work ..... X X X X Extracts X X X X X X X X Extracts X X X X
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