COMMISSIONER OF CENTRAL EXCISE Vs. SHRIRAM REFRIGERATION INDUSTRIES

JUDGEMENT

(1.) AS common question of law arises in all these appeals, they respondent being disposed of by a common order.

(2.) SHRIRAM Refrigeration Industries Limited (SIL), which later changed its name as Shriram Industrial Enterprises Limited with effect from 20.05.1992 and then to Siel Limited from 10.05.1995, had, through a scheme of arrangement with the approval of the High Court of Delhi, transferred its compressor business, along with its all assets, to Siel Compressors Limited. Later its name was changed to M/s Tecumseh Products India Limited i.e. The respondent SIL was undertaking repairs to damaged and defective compressors at its service center, which is separate from the main factory but adjacent thereto. On the ground that SIL was manufacturing stators, Central Excise officials issued show cause notice dated 17.01.1991 demanding excise duty from 1.1.1987 to 31.7.1990 and another notice dated 25.3.1991 demanding duty for the period 1.8.1990 to April 1992 to SIL. After replies were sent to those show cause notices by SIL, the Collector, Central Excise, through his order dated 25.11.1991, dropped further proceedings on the said show cause notices dated 17.01.1991 and 25.03.1991 holding that stators received by SIL from the job workers had all the essential characteristics of fully manufactured goods and that no new product emerged from the service center of SIL. Questioning the said order of the Commissioner, the Excise Department preferred an appeal to the Appellate Tribunal, which after hearing the said appeal along with another appeal preferred by the Commissioner, through a common order dated 24.11.1997 held that the process undertaken by SIL amounted to manufacture of stators and so it is liable to pay excise duty and penalty. Aggrieved thereby the respondent preferred appeals to the Supreme Court under Section 35L(b) of the Act. During the pendency of the appeals before the appellate Tribunal and the Supreme Court, Central Excise officials periodically issued eleven show cause notices to SIL, Siel Limited etc, between 31.11.1992 to 27.5.1998 alleging that the process of shaping, varnishing and baking of stators undertaken by it in its premises amounts to manufacture of the stators and so it is liable to pay excise duty, penalty etc., for which replies were sent contending that after the Central Excise Department issued show cause notice dated 17.01.1991, claiming excise duty, it stopped the process of repairing or manufacturing stators in its premises and gave that work to job workers under various agreements and so it is not liable to pay any excise duty etc., as claimed in the show cause notices. After the Supreme Court upheld the order of the Appellate Tribunal and dismissed the appeals of the respondent the Collector, after considering the replies to the show cause notices sent by the respondent and its predecessor in interest and the material on record, did not agree with the contention of the respondent that the activities that were being carried out by its predecessors in the service center do not amount to 'manufacture' even though it might have discontinued the activities of varnishing and baking the stators and entrusted that part of the work to job workers, and confirmed the demand made by the Central Excise officials. Questioning the said orders of the Commissioner, the respondent preferred an appeal to the Customs Excise and Service Tax Appellate Tribunal, South Zone, Bangalore (CESTAT), which, by the orders impugned, by accepting the contention of the respondent that no process of manufacture is taking place in the service center, held that inasmuch as supply to and receipt of materials from the job workers is not disputed by the department and as the records produced i.e. purchase orders, bills etc prove the transfer of process from service center to job workers, allowed the appeals of the respondent and set aside the demands made by the Excise officials. Hence these appeals by the Revenue.

(3.) THE contention of the learned Assistant Solicitor General is that inasmuch as the factum of 'manufacture' of stators by the respondents is admitted and as the respondents did not produce the agreements between it and the job workers to show that it entrusted the job of 'manufacture' of stators to job workers and that it is the job workers that are actually 'manufacturing' the stators and are supplying those stators to it for being marketed, and as the Tribunal failed to take into consideration the various contentions raised before it by the Revenue and did not properly understand the purport of the ratio in Ujagar Prints case (Supreme Court) and Pawan Biscuits Co. case (Supreme Court) this Court is competent to decide these appeals.