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2015 (12) TMI 669 - SUPREME COURT

2015 (12) TMI 669 - SUPREME COURT - 2015 (326) E.L.T. 634 (SC) - Valuation - manufacture of items of furniture on job work basis - inclusion of cost of raw materials, job-charges paid to M/s. SJA, plus drawings and design charges for the furniture items - handicraft items or not - banafide belief - Extended period of limitation - Held that:- Assessees had taken a specific plea to the effect that they bona fide believed that the manufacture of wooden furniture manually by artisans/craftsmen were .....

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items supplied by the assessees under the aforesaid contract to M/s. ITC Ltd. were exempt for payment of excise duty. Thus, insofar as the appellants are concerned, they had taken a particular stand in the declaration filed as early as on 16.07.1987 disclosing all relevant facts. However, the Central Excise Department at New Delhi did not take any action thereof. Issuance of show cause notice on 22.10.1996, after a long gap, would clearly be time barred and under the aforesaid circumstances, it .....

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naya, Adv., Mr. Hemant Bajaj, Adv., Mr. Anandh K. Adv. And Mr. T.D. Satish, Adv. For the Respondent : Mr. Yashank Adhyaru, Sr. Adv., Ms. Nisha Bagchi, Adv., Ms. Sunita Rani Singh, Adv., Ms. Sujeeta Srivastava, Adv., Mr. Sanjai Kumar Pathak, Adv. And Mr. B. Krishna Prasad,Adv. ORDER The facts in brief are that on 13.1.1992,M/s Sita Juneja & Associates (hereinafter referred as M/s SJA), was awarded a contract by M/s ITC Ltd. to make different items of furniture for a Five Star Hotel at Jaipur, .....

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M/s Hotel Rajputana Palace Sheraton, a Five Star Deluxe Hotel owned by M/s ITC Ltd., had entered into agreements with different manufactures of furniture for the manufacture of different items of furniture at site on labour contract basis as per the terms, conditions and rates set out in the respective agreements, the Officers of the Central Excise visited Hotel Rajputana on 12.12.1995 and directed the representatives of M/s ITC Ltd. to furnish complete information relating to the manufacture o .....

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basis of scrutiny of the agreement, details furnished, and statements recorded, it appeared that M/s SJA had engaged itself in the manufacture of items of furniture on job work basis for M/s ITC Ltd. and, accordingly, they are the Manufacturer of the said excisable goods within the meaning of Section 2(f) of the Act. Accordingly, show cause notice dated 22.10.1996 was issued to M/s. SJA asking it to show cause as to why Central Excise Duty amounting to ₹ 23,90,715 should not be demanded fr .....

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nt herein (one of the partners of M/s. SJA). Appellant's case is that the firm had been dissolved on 05.10.1996 and one of the partners namely, Sita Juneja as proprietress was running the business thereafter under the name and style of Sita Juneja & Associate . The demand made was resisted by the erstwhile partners in their replies to the notice on various grounds, one of which was that the partnership firm was no more in existence. According to the appellants, there were no provisions i .....

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ts Order-in-Original dated 08.01.1998 adjudicated the dispute and confirmed the demand duty of ₹ 17,51,329/- under Section 11A read with Rule 9 (2) and imposed penalty of equal amount under Section 11AC. The Commissioner held that appellant along with other in the capacity as partners of the erstwhile firm were jointly and severally liable to pay the duty and penalty amounts as also to pay interest under Section 11AB on the duty amount. The Commissioner imposed penal of ₹ 1.5 lacs on .....

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the firm, any goods manufactured by M/s SJA could validly be assessed to duty in their names and whether any demand of such duty could be raised on them under the Act and the relevant rules framed thereunder. The Member (Technical) and Member (Judicial) of the Tribunal differed with each other and the matter was referred to before the President and the President consented with the view taken by Member (Technical) The Tribunal vide its order dated 29.08.2007 dismissed the appeal filed by the app .....

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ation No. 76/86 CE though the goods are made pre-dominantly by hand and are covered by the description of other furniture under Heading 94.03. It also held that M/s. SJA is not liable to pay any penalty since the duty demand was for the period prior to insertion of provisions. The quantum of redemption fine was also reduced to ₹ 3 lacs. However, no finding was given on the aspect of the immovability of the items in question and the issue of limitation. On the other hand, Member (Technical) .....

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d Member, followed the decision of the Larger Bench of the Tribunalon the same issue decided in the case of Gopal Industries vs. CCE and agreed with Member (Technical). Hence, these appeals. After hearing the learned counsel for the parties, we are of the opinion that the appeals warrant to be allowed solely on the ground that the show cause notice issued was beyond the period of limitation and extended period of limitation as per the proviso to Section 11A(1) of the Act invoked by the Departmen .....

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