GENERAL FABRICATORS Vs. COMMISSIONER OF CENTRAL EXCISE, MANGALORE

JUDGEMENT

(1.) BOTH these appeals arise from Order -in -Original No. 5/2002 dated 26 -9 -2002 passed by Commissioner of Central Excise, Mangalore confirming demands on the fully fabricated insulated tanks and semi -finished insulated tanks at the premises of the appellants. The matter had been remanded by the Tribunal to examine as to whether the appellants are manufacturers or not and whether the goods are immovable property. The Commissioner has examined the issue in great detail and has arrived at the findings in para 16 and 17 holding that appellants are the manufacturers and as they are getting the work done from Bharathi Engineering, Udupi and Perfect Engineering Works, Udipi partially with regard to the manufacture of insulated tanks. Some of the work such as copper pipe bending and stainless steel bending was done at their place and certain items of work was got done by specialized crafts men like Blacksmith. The Commissioner has noted that these tanks are part of cooling unit, storage/pressure equipment and are covered under chapter sub -heading 8418 of Central Excise Tariff and not eligible for the benefit of SSI notification. The contention of the counsel is that appellants were only supplying the raw materials to the contractors, who were manufacturing the items and they cannot be held to be manufacturers. Their further contention is that even if they are held as manufacturers, the item is classifiable under chapter sub -heading 8419.00 of Central Excise Tariff and eligible for the benefit of SSI Notification No. 175/86 -C.E., dated 1 -3 -1986. He submits that all these tanks were part of ice candy machines and ice -cream machines and they were all supplied to ice -cream parlours and ice -cream factories. He submits that Tribunal has accepted the classification of these items under chapter heading 84.19 in the case of CCE v Gasko Refrigeration Engineers [1993 (63) E.L.T. 568]. Therefore, it is contended that in terms of this judgment, they are eligible for the benefit of SSI exemption. He points out that all the clearances were within the exemption limit and there is no dispute, hence the appeal has to be allowed with consequential relief. Learned SDR submitted that the activity of manufacture was carried out by the appellants themselves and the contractors were hired labourers and were not working on principal to principal basis with regard to the classification dispute. He submitted that the Tribunal ruling is in assessees favour.

(2.) ON a careful consideration of the submissions made by both sides, we are convinced that the findings recorded by the Commissioner in para 16 and 17 in so far as the assessee being manufacturer is required to be upheld. The assessee was got partial works done from the labour contractors. The relationship was not on principal to principal basis. Even as per the evidence produced, the contractors were only receiving labour charges and various work was done at separate places and ultimately assessee was supplying these items to 201 customers spread all over the country. The appellants contention that these items are parts of ice -cream and ice candy machines and are classifiable under heading 84.19 of CET and eligible for the benefit of the notification. They have cited the Tribunal ruling rendered in the case of CCE v. Gasko Refrigeration Engineers. On our perusal of the citation, we find that the Commissioners classification of this item under 8418.00 of CET is not correct. They have to be classified under chapter 8419.00 in terms of the Tribunals ruling rendered in the case of CCE v. Gasko Refrigeration Engineers. The clearances to the appellants were all within exemption limit in terms of the impugned order, therefore they are eligible for the benefit of the SSI exemption. The appeals are allowed on this ground with consequential relief by setting aside the demands penalties and fine.