TMI Blog2007 (10) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s. K. Ramachandra Textiles 41/05 dt. 25.11.05 7,30,608 7,30,608 E/142/06 2000-01 to 2003-04 3. M/s. N. Gopinarayanan Associates 42/05 dt. 28.11.05 12,60,006 12,60,006 E/147/06 2000-01 to 2003-04 4. M/s. N. Gopinarayanan Textiles 42/05 dt. 28.11.05 80,59,614 80,59,614 E/143/06 2000-01 to 2003-04 5. M/s. M. Ramanathan Sons 43/05 dt. 29.11.05 69,96,796 69,96,796 E/146/06 2000-01 to 2003-04 6. M/s. M. Ramanathan Co. 43/05 dt. 29.11.05 15,54,715 15,54,715 E/145/06 2000-01 to 2003-04 7 (i) M/s. K.P. Mathurai Co. (ii) M/s. K.M. Krishnan Tex. (Respondents) 82 83/06 28.04.06 24,00,482 5,26,276 24,00,482 5,26,276 E/646/06 April, 03 to March 2004 2. Common facts of the case are that the appellants got bed linens and towels woven by power loom owners. They paid for the job done by the weavers on piece rate basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dyed yarn was got woven into bed linens and towels on job work basis by the owners of power looms. The weavers were paid for job work on piece rate basis. The towels and bed linens on receipt were sent to different households where women tied knots at the warp ends of the bed sheets and towels. These women also were paid on piece rate basis for the work. The towels/bed sheets returned to CE were then tested for defects. Defective towels/bed sheets were sold as seconds. The weavers were not paid for such pieces. On receipt of the towels/bed sheets with the loose yarn tied at both warp ends, they were affixed with stickers by stitching or pasting. The stickers carried the brand name of CE. CE split their business and, another firm in the name and style of M/s. K. Ramachandra Textiles (KRT for short) was started in August,2003. Shri M. Kasilingam, father of Shri K. Ramesh, partner of CE was the proprietor of KRT. KRT engaged in the same activity as CE and sold bed linens and towels with the same brand name "SITA TEX", "CIMA TEX" and "KAASI FABRICS" and the same stickers. CE had not paid duty on clearances of bed linens and towels at any time during 99-2000 to 2002-2003, thoug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndred and forty five only) towards duty from M/s. Chandra Enterprises along with appropriate interest on the amount confirmed and imposed equal penalty as the duty on M/s. Chandra Enterprises under Rule 173 Q. He demanded a sum of Rs. 7,30,608/- (Rs. Seven lakh thirty thousand six hundred and eight only) from M/s. K. Ramachandra Textiles along with appropriate interest and imposed equal penalty as the duty on M/s. K. Ramachandra Textiles. 6. We heard the arguments of the ld. Counsel for the appellants in appeals No. E/142 to 147/06 and respondents in revenue appeal No. E/646/2006. In addition to reiterating the grounds taken in the appeal, he submits that the order of the Commissioner (Appeals) impugned in revenue's appeal contained the best defence and arguments in support of the appeals they had filed. The Counsel took us through the above order in appeal. 6.1 The Commissioner had framed the following questions to be decided by him. (i) Whether the processes undertaken by the appellants amounted to manufacture and whether they were manufacturers for the purpose of central excise law; (ii) Whether the value of clearances of the two units could be clubbed tog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed Bituman Complex (I) Pvt Ltd. Vs. CCE (1997 (90) ELT 374 (Tri.)) and (ii) Smithkline Beecham Asia Vs. CCE (2004 (168) ELT 40 (Tri.)), the Tribunal decided that a job worker who had a factory of his own was a manufacturer if it was an independent unit. When the job worker was an independent unit and there was no financial flow back between the customer and the job worker, the job worker was the manufacturer and not the customer who supplied the raw materials. 7. The department had not advanced any evidence to establish that the job worker was a dummy of the supplier of the raw materials. The job worker had his own factory, work force, plant and machinery and technical know how etc. In such circumstances the job worker was the manufacturer as held by the Tribunal in ORG systems Vs. CCE (1994 (73) ELT 450 (Tri.)). This decision was upheld by the Apex Court as reported in [1998 (102) ELT 3 (S.C)]. Accordingly, the Commissioner (Appeals) held that the appellants were not the manufacturers of towels and bed sheets they sold. The Commissioner found as incorrect the findings of the Additional Commissioner that the bed sheets and towels became marketable only after b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llegation of the department to treat the appellants as manufacturers was mainly for the reason that affixing stickers, making knots and packing after the bed linens/towels were received imparted marketability to the bed linens and towels. This perception was fallacious. 11. The ld. SDR reiterates the arguments contained in the order of the original authority. 12. We have carefully considered the facts of the case and the rival submissions. We find ourselves in agreement with the findings of the Commissioner (Appeals) submitted by the ld Counsel. We agree with the Commissioner that suppliers of cotton yarn to job workers who converted the yarn into bed sheets and towels on payment of charges are not manufacturers of bed sheets and towels. The yarn loses its commercial identity and becomes bed linen / towel at the hands of the weavers who are independent entrepreneurs not subject to any control and superintendence by the appellants. Just like the women who tie knots at either end of the towels and bed linens for a payment, the weavers also work for a compensation paid by the appellants. They own the infrastructure to produce fabric and weave fabrics for any supplier of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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