MISTRY BROTHERS Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) THE appellants herein challenge the order of the Commissioner of Central Excise, Ahmedabad by which he has confirmed a duty demand of Rs. 5,83,338/ - against M/s. Mistry Brothers on the ground that they were liable to pay duty on the activity of manufacture of metal and wooden furniture taken up as project work for big industries, corporate offices, banks, insurance companies, Government undertaking offices etc. without following central excise procedure and evading central excise duty thereon. The demand has been worked out after allowing SSI exemption, and the period of demand is 1994.95 to 1997.98, They also challenged the penalty of Rs. 2,27,806/ - imposed under Rule 173Q of the Central Excise Rules, Rs. 3,55,532/ - under Section 11AC of the Central Excise Act (totally equal to duty amount) levy of interest under Section 11AB of the Act and the confiscation of plant, building, land and machinery with option to redeem it on payment of fine. Shri Mistry, partner of Mistry Brothers is aggrieved by the imposition of penalty of Rs. 50,000/ - upon him.

(2.) WE have heard both sides. We find that the plea of the partnership firm that they are primarily engaged in the profession of interior decoration and the actual work of manufacturing of furniture is done by the carpenters who are independent persons and raise bills on them and who are to be treated as the manufacturers, being independent job workers, based upon Tribunal's orders in the case of Commissioner of Central Excise v. Sonali Enterprises and Smithkline Beecham Asia Ltd. v. Commr. of C.Ex. Visakhapatnam 2004 (168) E.L.T. 40 has been considered by the Adjudicating Authority in paragraphs 29 and 30 of the impugned order. We note that there is no written agreement between the partnership firm and the contractors. However, it is noted that the firm was submitting quotations to their various customers for providing various types of furniture and fixing at site and they were getting orders for supplying furniture to the customers. In the partnership deed, it is clearly stated that the firm will be doing the work of manufacture and sale of wooden furniture. Raw material was supplied by them to the contractors. The contractors/carpenters were not engaged by the customers but were engaged by the partnership firm for doing their work. The only fact relied upon by the Id. counsel for the appellants to press the plea is that it is the carpenters who are the job workers/manufacturers are raising all bills upon the partnership firm. However, to our minds, this is not sufficient for holding that the carpenters are to be treated as independent job workers/manufacturers as who ever does any work, whether hired labourers or independent job workers, can raise bills for the payment due to them. This aspect has also been considered by the Tribunal in Inter scape v. CCE Calcutta 2001 (135) E.L.T. 942, wherein it has been held that mere raising of bill at rate contract basis instead of daily wage basis itself is not sufficient to imply that labour contractors are manufacturers. Moreover at the time of visit to the premises of the partnership firm, officers found that there were equipments like Drilling Machine, Circular Electric Saw etc. which were required for manufacture of wooden furniture and this would show that Mistry Brothers are a manufacturing unit. In the light of the above discussion, we have no hesitation in holding that it is the appellant firm which is the manufacturer of the goods in question and hence required to discharge the duty liability thereof.

(3.) THE next contention of the appellant is that the benefit under SSI Notification is available to the unit for the year 1997.98 in the light of CBEC letter F. No. B.41/1/97 -TRU dated 7.4.1997, as the value of clearance was below the ceiling limit in that year. The Commissioner has rejected this plea on the ground that the firm did not exercise the option to avail the benefit of SSI exemption under Notification No. 16/97 which was the relevant Notification in force during the year 1997 -98. However, CBEC letter clarifies that if a small scale unit does not, want to pay excise duty at the normal rate, then no option of any kind is required to be exercised by the unit for the reason that the benefit of Notification No. 16/97.C.E. is applicable as legally available benefit provided the unit is otherwise eligible to the benefit, and that the question of exercising option arises only if the unit wishes to pay excise duty at the normal rate and not if the unit wishes to avail of the benefit of Notification No. 16/97.C.E. In the light of the CBEC letter which is binding on the Revenue authorities, we reduce the demand by Rs. 2,59,827/ - (Two Lakhs Fifty nine thousand Eight hundred twenty seven only) which is shown as the duty payable for 1997.98 as per Appendix I to the impugned order.