SUNDARAM CLAYTON LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) IN this appeal against the Order -in -Original No. 36/91, dated 3 -12 -1991 passed by the Additional Collector of Central Excise, Madras, is impugned before us on the ground, inter alia, that duty of Rs. 54,088.96 confirmed on the appellants and penalty of Rs. 10,000/ - imposed on them needs to be vacated as the appellants were not the manufactures of the conveyer assembly system in this dispute.

(2.) SHRI A. Vijayaraghavan learned Consultant for the appellants submitted that the appellants had subcontracted manufacture of the conveyor assembly system through two sub -contractors on record and the appellants had supplied certain electrical equipments pertaining thereto for their use. After fabrication, the system which consists of other modules or sub -system, was tested by the job worker at their premises. Since the system is one which could not be transported as such and hence, was brought in CKD condition to the appellants' premises. The space available at the job worker's site was not adequate for the entire system to be assembled into one full system and to be tested. Therefore, this was done at the appellants' factory . He submitted that the job worker being eligible for SSI exemption, no duty was required to be paid on the system cleared by them. He further submitted that on subsequent assembly, testing and demonstration of the equipment, meeting the buyers specifications at the appellants' factory premises, would not amount to manufacture as no new goods emerged in the appellants' premises and therefore, the order impugned erroneously confirmed duty and imposed penalty. He submitted that the adjudicating authority had accepted these facts in the order impugned, but had proceeded to confirm demands etc. on the ground that the system was fully assembled and tested for the first time in the appellants' premises, that the appellants had demonstrated its performance to the buyer and stood committed for the warranty obligations as per the contract with the buyer. Therefore, the order impugned held that these processes amounted to manufacture of full system for the first time in the appellants' factory premises and hence involved manufacture thereof leading to its dutiability.

(3.) HEARD Shri S. Kannan, learned DR who submitted that the following facts need to be considered in this connection :