ALDOWIN Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) IN these 4 appeals, arising out of a common Order -in -Original No. 27/2001 passed by the Commissioner, Central Excise, the issue involved is whether the panels of Aluminium Glass Curtain Wall emerge on account of manufacturing activity, and if so, who are the manufacturer, whether M/s. Aldowin, Appellant No. 1 or M/s. Balaji Hotels and Enterprises Ltd. (BH& EL), Appellants No. 2.

(2.) SHRI V. Lakshmikumaran, learned Advocate, submitted that M/s. BH and EL were engaged in the construction of a 5 Star Hotel at Chennai; that for installing facade of glass curtain, they imported glass Sheets of specific sizes exactly required as per design and the opening of the facade and purchased locally aluminium frames in dismantled condition after paying Central Excise duty; that the silicon sealant and other materials were also bought locally; that they entered into a labour contract with M/s. Aldowin and Blue Chip Consultants for providing labour for the purpose of assembling panels into frame, erecting glass sheet fixed on to the aluminium frame to the building so as to install the aluminium structural glazing system; that the Commissioner, under the impugned Order, has held that aluminium glass panel have emerged before installation which are marketable and that as per terms and conditions of the contract, Aldowin are the manufacturer liable to pay Central Excise duty; that the Commissioner has classified aluminium glass panel under sub -heading 7610.90 of the Schedule to the Central Excise Tariff Act and besides confirming the demand of duty and imposing penalty on Aldowin, has imposed penalty on BH&EL and Shri N.S. Sankaran, General Manager, and Shri J. Roy Franando, Project Manager of M/s. BH⪙ that the Commissioner has also confiscated 156 aluminium glass panels with an option to redeem the same on payment of fine of Rs. 17.50 lakhs.

(3.) THE learned Advocate, further, submitted that Aldowin merely supplies labour for the work which inter alia include fixing of the imported heat strengthened laminated glass to the aluminium frames; that after fixing the glass to the aluminium frame, silicon sealant is applied to fix the glass and close the gaps; that the work of filling silicon sealant was entrusted as a labour contract by BH&EL to another contractor M/s. Blue Chip against whom further proceedings had been dropped by the Commissioner; that then each piece called glazed panel is joined together with the help of bracket to form a curtain wall; that glass sheet is complete once the silicon sealant is applied and left to dry for a period ranging from 20 to 30 days; that the glass sheet remains, as glass sheet even after the fixing on aluminium frame and as such there is no emergence of new product nor is there any change in the use of the product; that accordingly the process does not amount to manufacture. Reliance has been placed on the decision in the case of J.G. Glass Industries Ltd. v. U.O.I., 1998 (97) E.L.T. 5 (S.C.), the learned Counsel also mentioned that even if the process undertaken by Aldowin amounts to manufacture, the Appellant No. 1 is not the manufacturer; that it is an undisputed fact that the aluminium glass panel is completed only after the action of silicon sealant which is a specialized job; that the silicon sealant is undisputedly applied by the labourers of Blue Chip and not by the labourers of Aldowin; that in such circumstances Blue Chip should have to be held as manufacturer since they are the persons who are applying silicon sealant and the demand of duty cannot be raised against the Appellant No. 1. The learned Advocate, further, contended that the classification of the product under Sub -heading 7610.90 is not correct; that the aluminium frame purchased by BH&EL is classified under Subheading 7610.90 which refers to aluminium structure; that the glass sheet fitted on the aluminium frame remains glass sheet, and therefore, it is an article of glass meriting classification under Chapter 70 of the Tariff; that the essential character to the product is provided by the glass and not by the aluminium as decided by the Commissioner; that in all respects weight -wise, volume wise or value wise glass is dominant material; that further when the glass sheet is mounted on the frame of aluminium the frame loses its identity, and in fact, aluminium panel will not be visible and it cannot be called, as alluminium structural system; that the Commissioner has given the findings in the impugned Order that aluminium glass panel gets its form and functioning utility because of frame and mere glass cannot be fixed to the masonry of the building without the support of the aluminium frame; that the material which only provide support cannot give essential character to the product, and therefore, the classification under Sub -heading 7610.90 is not sustainable. He also contended that the demand of duty has been made for the period from August, 1999 to February, 2000 under the show cause notice dated 12 -3 -2001 and as such demand is time barred; that they were under the bona fide belief that no duty is payable on the impugned goods as there was no process amounting to manufacture is involved; that further the silicon sealant was also not applied by them; that moreover on an identical issue the Commissioner (Appeals) has held that the process does not amount to manufacture. He also mentioned that since the raw material and other infrastructure was supplied by BH&EL they were only working as hired labourer and hence they cannot be held to be a manufacturer as held by the Tribunal in the case of Maruti Udyog Ltd. v. CCE, New Delhi, 2001 (134) E.L.T. 188; that for the same reason no penalty is imposable on the Appellant No. 1. Finally, he submitted that if it is held that duty is leviable, the quantification of duty is incorrect; that it is settled law that labour charges paid includes the profit margin of the job worker and addition of 10% normal profit is incorrect and not sustainable; that moreover value of raw material included in the quantification includes the element of Modvat credit which has to be reduced as held by the Supreme Court in the case of CGE v. Dai Ichi Karkaria, 1999 (112) E.L.T. 353 (S.C.); that they would also be eligible for availing Modvat credit of duty paid on the raw material.