INTERSCAPE Vs. COMMISSIONER OF CENTRAL EXCISE

JUDGEMENT

(1.) This appeal arises from Order -in -Original No. 6/2000 passed by CCE, Visak holding that the activity carried out by the appellant in respect of supplying various items of furniture under a contract with Park Hotel amounts to process of manufacture. It has also been noted that the appellants were controlling and supervising the activity of the workers in manufacturing the items in the Hotel itself and in terms of the contract they were to supply the bills, etc. Therefore, the contention of the appellants that the sub -contractors with whom there was no agreement for the manufacturers has been rejected. The appellants' plea that the ward robe, bar counter and reception counter are not goods as they are affixed to the walls and cannot be removed without breakage has been rejected, The appellants prayer that the bona fide belief was held by them that the items were handicraft and not furniture, and that being handicrafts are exempt from excise duty in terms of Notification No. 76/86 -CE and they were not required to file declaration in terms of the Board Circular No. 58/1/2002 -CX dated 15.1.2002 has also not been accepted. The appellants drew attention to the judgment rendered in the case of Arva Cabinet House v. CCE wherein TV cabinets was held to be handicrafts. The Tribunal has held the furniture to be handicrafts in the case of CCE v. Louis Shoppe 1995 (75) ELT 1. However, the Apex Court reversed the judgment but gave the benefit of time bar on the ground that the appellants held a bona fide belief that the goods are handicrafts as held in . The Commissioner did not accept this plea also and rejected their case.

(2.) Ld. Chartered Accountant, Shri Rajeev Wagle argued on the same points as raised before the Commissioner and contended that the three items namely ward robe, bar counter and reception counter cannot be goods as they are individually affixed in the hotel rooms. They cannot be removed as there is no separate board on the backside but the support is the wall and they cannot be brought out from the door. In this regard, he relied on the judgment rendered by the Apex Court in the case of Triveni Engineering and Inds. Ltd. v. CCE wherein it has been held that the turbo alternator is fixed on the platform piece by piece, then it does not amount to manufacture and they are not goods. He refers to the Board Circular No. 58/1/2002 -CX dtd. 15.1.2002, wherein all the Supreme Court judgments have been noted therein and guidelines have been given to the adjudicating authorities to consider the items to be goods or not. He submits that the appellants were not the manufacturers but the manufacturers were the sub -contractors and relied on some judgments wherein the sub -contractors have been held to be the manufacturers as held in the Karnataka High Court judgment rendered in the case of Applied Industrial Products Pvt. Ltd. v. CCE . He submitted that the demands are barred by time. His further submission is that the jurisdictional Commissioner in Order -in -Original No. 13/M -I/2001 dated 9.2.2001 has accepted their contention that M/s. Natwarlal and Co. was a sub -contractor who was the manufacturer in respect of the goods manufactured and supplied by them in similar circumstances. Therefore, he submits that the impugned order is required to be set aside and appeal to be allowed.

(3.) Ld. DR Shri Jayachandran took us through the contract entered into by the Park Hotel and the appellants wherein it is clearly recorded that the appellants shall carry on the supervising work and produce the bills for purchase of items. They have clearly laid down in the agreement that the labourers should be insured and the appellants have not entered into an agreement with sub -contractors. They are all hired workers and cannot be considered as independent workers. He relied on the Tribunal's decision rendered in the case of Kerala State Electricity Board v. CCE wherein the Tribunal has noted that there was no principal to principal relationship and held the Electricity Board to be the contractors. The same was affirmed by the Apex Court as 1992 (62) ELT A52 (SC). He submitted that the relationship between the sub -contractor and the appellants was not on principal to principal basis, therefore it cannot be said that the sub -contractor was the manufacturer. There is no evidence placed in this regard. The plea of bona fide belief cannot be accepted as furniture is not a handicraft and in common parlance everyone understands furniture to be sold in the furniture shop and not in the handicraft shop.