TMI Blog2003 (7) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for preservation of medicines, food and other perishable articles. The said walk-in-coolers were of varying sizes depending upon the specifications and requirements of each customer. The said walk-in-coolers consist of two parts namely: (1) cooling unit and (2) Cold room. The cooling unit is a complete refrigerating equipment consisting of condensing unit (with compressor) and evaporating unit with motors. The Cold room is made of the size required by the customer with wooden flooring at the bottom and assembly of prefabricated panels on all sides and also at the top (ceiling). These panels are insulated panels with G.I. sheets, wooden frames and insulation in between. One of the side panels would have insulated doors with door frame for entry into the walk-in-cooler. The cooling unit is fixed to one of the ceiling insulated panel. In short the walk-in-cooler is like a container with four sides and a roof made by the assembly of various insulated panels and has a wooden flooring at the bottom. One door is fixed on one of the panel for entry into the cooler and on one of the ceiling panel a cooling system is fixed. The assembled panels are covered with strips for maintaining low ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bruary, 1985, the Petitioner Company for the first time commenced manufacture of insulated panels at their factory. The Petitioners thereupon filed classification list stating therein that the insulated panels manufactured by them with effect from 4-4-1985 are classifiable under Tariff Item 29A(3) of the Central Excise Tariff. The said classification list was approved by the Respondents on 17-7-1985. However, no excise duty was payable on the insulated panels in view of the Exemption Notification No. 80/62-C.E., dated24-4-1962. For the sake of convenience, the Tariff Item 29A as it then stood is reproduced here-in-below: - Item No. Tariff Description Rats of Duty 29A REFIGERATING AND AIR- CONDITIONING APPLIANCES AND MACHINERY, ALL SORTS AND PARTS THEREOF - Refrigerators and other refrigerating appliances, which are ordinarily sold or offered for sale as ready assembled units, such as ice makers, bottle, coolers, display cabinates and water coolers. Thirty per cent ad valorem Air-conditioners and other air-conditioning appliances, which are ordinarily sold or offered for sale as ready assembled units, including package ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sis. It was stated that at all times the insulated panels manufactured by the job worker were taken to the site directly and therefore, manufacturing any excisable part of walk-in-cooler in their factory did not arise at all. It was stated that the elementary work of assembling the insulated panels for the purpose of matching and adjustment to conform to the specification of the customers was carried out in their factory. Such assembly of insulated panels without the insulated doors and without the ceiling panel fitted with cooling unit, could not be said to be manufacturing a cold room in the Petitioner's factory. It was stated that when this Court in the Petitioner's own case reported in 1980 (6) E.L.T. 280 has held that the walk-in-cooler erected at site is not excisable under Tariff Item 29A (3) of the Central Excise Tariff, the cold room erected at site cannot be said to be a cabinet excisable under Tariff Item 29A(3) of the Central Excise Tariff. It was stated that the statements of the persons recorded under Section 14 of the Excise Act were not correctly and fully recorded and the Petitioners have clarified the correct position by the letters and/or affidavits of the said p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said panels on manufacture were sent by the contractor to the site directly for erecting the walk-in-coolers and hence assembling insulated panels into the cold room for walk-in-cooler in their factory did not arise at all. He submitted that without dealing or discussing this aspect the Collector erroneously held that the Petitioners are liable to pay excise duty on the cabinets allegedly manufactured by the Petitioners. He submitted that merely because some of the insulated panels were loosely assembled in the Petitioners factory to see as to whether they fit in properly or not. It could not be said that the Petitioners were manufacturing cabinets for walk-in-coolers. He submitted that even assuming that the Petitioners at the relevant time manufactured the insulated panels in their factory, the same were exempt by Notification No. 80 of 1962 and, therefore, no excise duty was leviable in respect of said insulated panels. It was submitted that if it is the case of the revenue that the Petitioners manufactured and cleared the cabinets from their factory, then it was for the Revenue to establish that the cabinets were in fact manufactured by the Petitioners in their factory and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... period July, 1981 to February, 1986. At the relevant time the limitation prescribed for recovery of duty not levied or not paid or short levied or short paid under Section 11A of the Act was six months. Since the show cause notice pertained to that period beyond six months, it was submitted that the claim was barred by limitation. He further submitted that the extended period of limitation provided under Section 11A of the Act could not be invoked in the present case because at all times, a Central Excise Inspector was posted by the Respondents in the factory of the Petitioners and therefore, the Respondents were aware of all the activities carried out in factory of the Petitioners. Under these circumstances, it was submitted that the Petitioners could not be held to be guilty of suppressing material facts and consequently the extended period of limitation could be invoked. He submitted that before the veil of six months limitation could be lifted, the Department must establish that there was suppression of facts on the part of the petitioners. He relied upon the decision of the Apex Court in the case of Cosmic Dye Chemical v. Collector of Central Excise reported in 1995 (75) E.L. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioners own case and the decision of the Allahabad High Court in the case of Mother India Refrigeration Industries P. Ltd. v. Superintendent of Central Excise and Others reported in 1980 (6) E.L.T. 600 (All.). The Petitioners were justified in believing that the parts covered under the Tariff Item 29A(3) should be such as are ordinarily sold or offered for sale as ready assembled units and that the parts of a complete plant erected at the site are outside the purview of Tariff Item 29A(1)(2) as well as (3). He submitted that when the aforesaid judicial view in favour of the Petitioners was prevailing at the relevant time [though reversed by the Apex Court subsequently in the case of Frick India Limited v. Union of India reported in 1990 (48) E.L.T. (627)] the Petitioners were justified in believing that the parts of walk-in-cooler manufactured by them were not excisable. In this view of the matter it was submitted that the recovery of duty and levy of penalty against the petitioners was barred by limitation and the impugned order is liable to be quashed and set aside. 14.Mr. Desai learned Senior Counsel appearing on behalf of the Respondents, on the other hand supported the deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not exempted. Therefore, it is cleat that the cabinet is a part of the refrigerating and air-conditioning appliances falling under the erstwhile Tariff Item 29A(3) of the Central Excise Tariff. The next question to be considered is whether the walk-in-coolers consist of a part which can be called as a cabinet? From the facts set out hereinabove it is clear that the walk-in-cooler is like an air-conditioned room made according to size, whose flooring is wooden in nature and its side walls with one or more doors and the roof consist of assembled insulated panels and instead of an air-conditioner there is a cooling system fixed on the top of one of the ceiling panel. Inside the walk-in-cooler medicines and other perishable articles can be stored and whenever need a person can easily enter the walk-in-cooler and take out the item stored therein. Thus a cold room with a cooling unit attached to one of the ceiling panel constitutes a walk-in-cooler. This cold room according to the revenue is a cabinet falling under Tariff Item 29A(3) of the Central Excise Tariff. It is not in dispute that the cold room is a part of the walk-in-cooler. A cabinet in the ordinary parlance is an enclosed c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssembled together with the help of nuts and bolts from all the sides with bottom and roof forms the cabinet. The cabinet becomes complete in all respect when the door is fixed to the cabinet along with hinges, handles etc. These cabinets are Sectionally built out of such panels and can be dismantled after unscrewing nuts and bolts. The dismantling is only for the purpose of transport as the same has to be refitted alongwith same nuts bolts at site. My labour charges for manufacture of such cabinet varies from Rs. 800/- to Rs.1400/-. I make about 2 to 3 cabinets per month. I have about twelve workers out of which five are engaged in manufacture of such cabinets the remaining 7 workers are utilised for manufacturing of crates etc. So far as cabinets for walk-in-cooler are concerned. I make the insulated panels, join them with other panels from all the four sides and with roof and bottom and fix the door along with handles, hinges etc. as such the cabinet is complete in all the respects along with necessary notes handles and hinges etc. and hand over the same to the company. These cabinets are inspected and tested by the company. After such inspection and testing by the company the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hasis supplied) Shri Vincent D Silva Marketing Executive of the Petitioners in his statement recorded under Section 14 of the Excise Act inter alia stated as follows :- "… As regards the walk-in-coolers are concerned, I am responsible for despatch of cabinet from the factory to our branch offices all over India. The entire system of supplying walk-in-coolers to our branch offices is as under :- I receive the orders from the Marketing office situated at Mittal Towers as well as from branch offices for supply of walk-in-coolers. I pass on the orders to the Commercial department situated in the factory premises. I also inform the Materials Department for supplying the contractor for carpentry with the required materials. We have the standerd drawings in respect of 4 models of walk-in-coolers, i.e. Model-ORG 260, ORG 590, ORG 900 and ORG 1200. The carpenter make the panels and erects the cooling room for the purposes of testing by Quality Control Department. The cooling room is complete only when the panels are fixed to each other with the help of nuts and bolts and door is fixed along with the hinges, handles and locks wherever necessary. This cold room i.e. cabinet for the wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 8th/9th September, 1986 sought to explain the contents of the statements recorded in February, 1986. In para 14 of the petition it is stated that while preparing reply to the show cause notice, it was noticed that the statements of the employees and the contractor were not correctly and fully recorded and, therefore, the Petitioners clarified the correct position by letters/affidavits of the persons whose statements were recorded under Section 14 of the Excise Act. Thus, it is clear that the explanation sought to be given to the statements recorded under Section 14 of the Excise Act is an afterthought and is at the benefit of the Petitioners. It is well established in law that even the retracted statements recorded under the provisions of the statute are binding upon the persons making the statements (see Surjit Singh Chhabra v. Union of India reported in 1997 (1) S.C.C. 508 and B.K.B. Patel v. ACC reported in 1997 (96) E.L.T. 211 (S.C.). In the present case the statements recorded under Section 14 of the Excise Act are not even retracted and therefore the said statements are binding in nature. 19.Even the subsequent explanatory letters affidavits of the contractor and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trol of the Quality Control staff of the Petitioners. Under the circumstances, the contention of the Petitioners that prior to 1985 the insulated panels were manufactured by a job worker, is totally false and that at all material times, the insulated panels were manufactured by the Petitioners in their own factory. 20.Once it is established that at all relevant times the insulated panels were manufactured in the factory of the petitioners, the next question to be considered is whether the said insulated panels were assembled into a cold room in the factory of the Petitioners? In the statements recorded under Section 14 of the Excise Act the contractor as well as all the high ranking officials of the Petitioners Company have categorically admitted that the assembly of insulated panels into a cold room was carried out in their factory and only after inspection and approval by the quality control staff of the Petitioners, the said cold room was dismantled for the purpose of easy transportation to the site, without retracting, the said statements were sought to be explained by stating that Petitioners used to loosely assemble the insulated panels for size and specification and that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... factory at Thane. Thus, the voluminous evidence on record clearly establishes that the cold room or cool cabinet was erected and inspected by the quality control staff of the Petitioners as well as the Customers in the Petitioners as well as the Customers in the Petitioners factory prior to despatch. In this view of the matter, we uphold the findings of the Collector that at all material times, the Petitioners had manufactured cold rooms/cabinets in their factory and cleared the same after dismantling it for easy transportation. 21.The fact that one of the ceiling panel manufactured was sent to the supplier of cooling unit for mounting/fixing the cooling unit on to the ceiling panel does not in any effect the variety of the statements of the officers of the Petitioners Company that the assembly of insulated panels into cold rooms was carried out in their factory. Mr. Vincent D Silva, Marketing Executive of the Petitioners has rightly stated in his statement that no further addition/modification to the cabinet of the walk-in-cooler is carried out at site and at the site there is no manufacture of cabinet involved and the dismantled panels are reassembled with the help of nuts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturer has not filed classification list deliberately with a view to evade excise duty or, if it is subsequently noticed that the said manufacturer has clandestinely removed the goods from the factory. To constitute knowledge, both parties must be labouring under a common belief that an activity is either a manufacturing activity or not and that on the item manufactured whether the excise duty is payable or not. In this case, it is the case of the Petitioners that the assembly of insulated panels into cold room/cabinet was not carried out in their factory. On detailed investigation and after collecting voluminous evidence, the Revenue has arrived at the conclusion that the contention of the Petitioners is false and that the Petitioners were all through, manufacturing insulated panels and assemble them into cold room/cabinet in their factory and after inspection and approval cleared the same in dismantled condition without payment of excise duty. It is not the case of the Petitioners that at all material times they were manufacturing cold room/cabinet for walk-in-cooler in their factory or that the Excise Inspector posted at their factory knew about the manufacture of cold room but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section of the Petitioners factory. In one breath the Petitioners contend that the insulated panels manufactured by the job worker were sent to the site directly without sending it to the Petitioners factory and in another breath, the Petitioners contend that even the insulated panels were loosely assembled in their factory for the purpose of matching and adjustment to conform to the specification of the customer. If the Petitioners were not manufacturing insulated panels and the insulated panels manufactured by the alleged job worker were directly sent to the site of the customers, then, how could the Petitioners loosely assemble the insulated panels in their factory for the elementary work ? It cannot be said that only after 1985 the Petitioners assembled insulated panels into cold room because, it is now conclusively established that even prior to 1985, the Petitioners were manufacturing insulated panels in their factory and assembling the same into a cold room/cabinet. Therefore, in the light of the unrestricted statements of several high ranking officials of the Petitioner Company as well as the documents seized from the Petitioners factory, it is conclusively established tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f limitation has been rightly invoked in the present case. 24.Alternate contention of Mr. Sanklecha was that in the light of the decision of this Court dated 7-5-1979 in the Petitioners own case and the decision of Allahabad High Court in the case of Mother India Refrigeration Industries P. Ltd. v. Supdt. of Central Excise Ors. [1980 (6) E.L.T. 600 (All.)], the Petitioners were under the bona fide belief that Tariff Item 29A(3), covered only those parts which are ordinarily sold or offered for sale as ready assembled unit and therefore, in view of the aforesaid judicial decisions prevailing at the relevant time, no action could be taken against the Petitioners under Section 11A of the Excise Act, we see no merit in this contention because firstly, in the assessees own case decided by this Court on 7-8-1979 the issue therein was whether the walk-in-cooler manufactured at site can be said to be an article which is ordinarily sold or offered for sale as ready assembled unit falling under Tariff Item 29A(1) of the Tariff. Since the walk-in-cooler was admittedly erected at site, it was held that the walk-in-cooler does not fall under Tariff Item 29A(3). Moreover at that time the evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p a false case that the insulated panels required for cold room were manufactured by the job worker and that the job worker sent the insulated panels directly to the site and that there was no occasion to erect the cold room at the Petitioners factory. The revenue has established that in fact at all times the insulated panels were manufactured in the Petitioners factory and the same were assembled into cold room/cabinet in their own factory and offered for inspection and on approval by the customer the said cold room/cabinet was cleared from the Petitioners factory. Thus the alternate contention of the Petitioners that in the light of the decision of this court in their own case and the decision in the Allahabad High Court referred to hereinabove, they were under the bona fide belief that the cold room/cabinet is not covered under Tariff Item 29A(3) cannot be accepted. 25.Several decisions were cited by the Counsel for the Petitioners in support of his submissions. In our opinion, all those decisions are distinguishable on facts. The decisions of the Apex Court in the case of M.M. Khambatwala (supra) is distinguishable on facts as in that household ladies were manufacturing goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nor the Petitioners filed any declaration and had sought exemption from payment of excise duty on cold room. The statements of the Petitioners employees recorded under the Act and the seized documents clearly establish that at all times the cold room/cabinet was erected in the Petitioners factory and the same has been suppressed by the Petitioners. The decision of the Apex Court in the case of Tamil Nadu Housing Board (supra) is also distinguishable on facts. In the present case, the Petitioners have falsely states that the insulated panels were manufactured by a job worker and the said job worker used to send the insulated panels directly to the site and not to the Petitioners factory. Evidence adduced by the Revenue clearly shows that there was no job worker involved and in fact, the insulated panels were manufactured by the Petitioners themselves in their own factory with the help of hired labourer and a false case was put up by the Petitioners with a view to evade duty. As regards, the decision of the Tribunal in the case of Synthetic Chemicals Ltd. v. Collector, Central Excise reported on 1992 (57) E.L.T. 480 (Tribunal), it is pertinent to note that in that case the bye-pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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