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Raunag International Ltd. Versus Commissioner of C. Ex., Lucknow

2016 (1) TMI 517 - CESTAT NEW DELHI

Manufacturer - Sub-contractor / job worker - who is liable to pay duty - appellant submits that the appellant had sub-contracted certain work to M/s. VEE under an agreement and as per the terms of the agreement, M/s. VEE is the fabricator of those piping and are liable to pay duty thereof being a job worker/manufacturer of such said goods, therefore, the appellant is not liable to pay duty. - Held that:- As M/s. VEE has executed the work of fabrication of piping being a job worker and payment wa .....

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ember (J) and B. Ravichandran, Member (T) Shri Pradeep Kumar Mittal, Advocate, for the Appellant. Shri Ranjan Khanna, Authorized Representative (DR), for the Respondent. ORDER [Order per : Ashok Jindal, Member (J)]. - The appellant is in appeal against the impugned order demanding duty along with interest and imposing penalty by the lower Authorities. 2. The facts of the case are that the appellant is engaged in a activity of undertakings Civil/Mechanical, turn-key projects at various sites .....

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portation, fabrication, erection of piping works start to finish till its final acceptance by the appellant and NTPC. On the work executed by M/s. VEE, no duty has been paid therefore proceedings were initiated against the appellant to pay the duty on the work executed by the M/s. VEE being a Labour Contractor of the appellant as the appellant is required to pay duty on the said work. In these set of facts, the proceedings were initiated against the appellant for demanding duty along with intere .....

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herefore, the appellant is not liable to pay duty. He also contested the issue on the ground of limitation as well as on the ground that the goods fabricated M/s. VEE is not a pipe but it is only a Shell and not liable to pay duty thereof. 4. On the other hand, learned AR reiterated the findings of the impugned order. 5. Heard the parties considered the submissions. 6. On examination of the show cause notice as well as the agreement, it is very much clear the nature of work execut .....

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rks from start to commissioning, handing over and expiry of warranty period. (3) M/s. VEE shall carryout works as per approved FQP (S), WPS and Drawings. (4) It was agreed by M/s. VEE that whatever LD on delay is imposed by NTPC on RIL shall be recovered the portion of works in VEE s scope as penalty from M/s. VEE s running/final bills/security deposits bank guarantees or from any other due payments for their portion of works. M/s. VEE agreed for this penalty price reduction on their d .....

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ed in working order. Use of other heavy machinery like hydra and tractor trailor, etc., shall be given on O & M charge basis. The O & M charges for the following shall as mentioned. Hydra - ₹ 195/- Per hour Tractor/Trailor - ₹ 180/- Per hour. However, M/s. VEE shall maintain a log book, to be signed by RIL supervisor for the use of RIL s equipment. The charges shall be based on actual hours the machine is used by M/s. VEE. (7) Water and power for construction purposes as .....

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ies will also be arranged by M/s. VEE for their operation at site on the assigned works. These all arrangements shall be made by M/s. VEE without any extra cost to M/s. RIL. (11) The unit rates as agreed by M/s. VEE are inclusive of loading, unloading, transportation, handling and cartage, etc., from NTPC/RIL stores, local site/shop handling, etc., and no extra payments shall be made on this account. It shall be M/s. VEE s responsibility for safe transit of entrusted materials to site and f .....

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in line accessories shall be given by RIL to M/s. VEE free of cost. All fabrication and erection of R&W pipes, fittings, supports, etc., are in the scope of work of M/s. VEE including arrangement of temporary supporting material, testing material, etc., required. It shall be the responsibility of M/s. VEE to ensure safe custody of all such free issue materials, accounting and reconciliations, of the same as required by NTPC/RIL as per their specification/norms on such works. (18) The s .....

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over and expiry of warranty/guarantee period. (19) M/s. VEE shall execute the works under normal condition of interference/power failure/fronts/local weather conditions/time required for testing etc. and no compensation or extra shall be paid to them due to such disruption of works . Note : (i) RIL shall deduct income-tax and work contract/turnover from the payments made to M/s. VEE against their RA bills as per rules and laws applicable at NTPC UNCHAHAR site. 25. All taxes, duti .....

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ing dated 19-8-1996, we find that nature of work executed by M/s. VEE is being a manufacturer/job worker of the appellant on principal to principal basis. In these circumstances, it cannot be said M/s. VEE is a labour contractor of the appellant and has fabricated the goods on behalf of the appellant. 8. A similar issue came up before this Tribunal in the case of AFL Pvt. Ltd. v. CCE, Mumbai-II reported in 2013 (295) E.L.T. 211 (Tri.-Mumbai), wherein this Tribunal has observed as under :- 7 .....

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r barges which are required for the purpose should be adequately constructed. An agreement was entered into by the appellants with the designers of the said goods wherein 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 contract .....

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d 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 labour manpower. The manufacture of the said goods would be supervised by the Architect Shri Kapur of AMC Marcons to designs the s .....

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hough as per the agreement in Clause 10, M/s. Raigad was required to discharge any Central taxes on the said goods and in turn the appellants have to reimburse the same. He further contended that as held by this Tribunal in the case of JCB India Ltd. - 2008 (12) S.T.R. 714 (Tri.) which was upheld by the Hon ble Apex Court as reported in 2010 (18) S.T.R. J110 wherein it has been held that by merely writing in an agreement that all central taxes would be payable by the appellants has no force in l .....

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hat machines which were procured for manufacturing process are cutting machines run with the aid of power, welding machine run with the aid of power, electrical cables, grinders run with the aid of power and electrical generating sets for generating electricity. It is M/s. Raigad who used their own machinery for fabrication of the said goods by using generators, transformers, cables, welding machines, cutting machines. It was further submitted that the show cause notice clearly reflect the admis .....

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he 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. 9. In those set of facts, the Tribunal has observed as under : - 14. On the contrary in the case of Diamond Cements Ltd. v. CC .....

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nts 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 w .....

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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 th .....

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