1990(01)LCX0071
BEFORE THE CEGAT, SPECIAL BENCH ‘B-1’ NEW DELHI
S/Shri Harish Chander, Member (J) and S.K. Bhatnagar, Member (T)
PARTAP STEEL ROLLING MILLS
Versus
COLLECTOR OF CENTRAL EXCISE
Order No. 6/90-B-l, dated 17-1-1990 in Appeal No. E/927/89-B-1
Cases Quoted
ARUNA INDUSTRIES v. COLLECTOR - 1986(05)LCX0038 Eq 1986 (025) ELT 0580 (TRI) [PARAS 2, 5, 10]
COLLECTOR v. VXL INDIA LTD.- 1988 (014) ECR 200 [PARA 2]
EMPIRE INDUSTRIES LTD. v. UNION OF INDIA - 1985(05)LCX0002 Eq 1985 (020) ELT 0179 (SC) [PARAS 3, 9]
RICHARDSON & CRUDDAS (1972) LTD. v. COLLECTOR - 1988(08)LCX0015 Eq 1988 (038) ELT 0176 (TRI.) [PARAS 3, 9]
STEEL AUTHORITY OF INDIA v. COLLECTOR - 1988(05)LCX0036 Eq 1988 (036) ELT 0316 (TRI) [PARAS 2, 5, 10]
UJAGAR PRINTS ETC. v. UNION OF INDIA - 1988(11)LCX0033 Eq 1988 (038) ELT 0535 (SC) [PARA 2]
Advocated By : Shri V. Sridharan, Advocate, for the Appellants.
Shri K.D. Tayal, Advocate, for the Respondent.
[Order per : S.K. Bhatnagar, Member (T)]. - Learned Counsel submits that the main issue involved herein is manufacture of various steel structures such as columns, beams, gantry, trusses, girders, purlins, section of windows (shutters) and fencing angles etc. The adjudicating authority has held that these goods fall under sub-heading 7308.90 whereas the contention of the applicant is that these are not goods because they come into existence only when they are incorporated into factory’s structure. Iron and steel products are supplied by them to one M/s. Mechel Engineers Works, Indore for manufacture of said steel structures and for erection of the same in the vacant land i.e. the project area of the factory. They had also been supplying electrodes, gases for welding to the said engineering works free of cost who in turn fabricate the steel structures within the factory. It is also seen from the impugned order that as per the statement of Shri R.K. Patwa, Proprietor of M/s. Mechel Engineering Works, whole work of fabrication and erection was to be done as per the noticee’s instruction only and that he had employed 20 labourers for the said job and all the labourers were insured by the noticee.
2. Learned Advocate for the applicant has urged that manufacture of steel structures has been held by the Tribunal in a series of judgments as not liable to duty because they are not goods. He relies for this proposition on (i) 1986 (025) ELT 580 [Aruna Industries, Visakhapatnam v. Collector of Central Excise] and (ii) 1988 (036) ELT 316 [Steel Authority of India v. Collector of Central Excise]. The learned Advocate further submits that a large number of decisions given in the impugned order in para 3.3. thereof were cited before the learned adjudicating authority but he has set aside all those citations by a single sentence that those judgments are not relevant here since they related to the erstwhile Tariff Item 68 of CET. According to him, the Collector has held that the goods are classifiable under sub-heading No. 7308.90 although there is no difference whatsoever in the scope of erstwhile Tariff Item 68 or the present sub-heading 7308.90 in as much as both the items related to goods not elsewhere specified/others. Only the scope of sub-heading 7308.90 is narrower than that of erstwhile Tariff Item 68 because sub-heading 7308.90 is only in respect of other articles of steel not specified in the heading 7308 whereas erstwhile Tariff Item 68 encompassed all other goods which were not mentioned in Tariff Items 1 to 67 of the old Central Excise Tariff. No change in definition of ‘manufacture’ as given in Section 2(f) of the Central Excises and Salt Act, 1944 has taken place. Therefore, there is no reason whatsoever that the judgments which were applicable to Tariff Item 68 so far as the structural are concerned, should not be made applicable to the new Tariff so long as there is no specific mention of structurals in the Tariff itself for the purpose ofexcisability. He also gave a list of large number of decisions which held that the raw materials supplier is not a manufacturer. The actual manufacturer is one, according to the learned Advocate, who actually manufactures/fabricates the goods. The demand on the applicant is therefore totally unwarranted and it should have been directed if at all against M/s. Mechel Engineers Works, according to the learned advocate. Some of the judgments given in the list are (1) 1988 (038) ELT 535 SC (at page 557), (2) 1988 (014) ECR 0200 (Collector of Central Excise, Ahmedabad v. VXL India Ltd.].
3. Learned D.R. urged that the citations to the effect that structurals are not ‘goods’ and therefore, are not excisable is no longer good law in as much as a subsequent judgment of the Tribunal reported in 1988(08)LCX0015 Eq 1988 (038) ELT 0176 (Richardson and Cruddas (1972) Ltd. v. Collector of Central Excise) has since been delivered. This judgment of the Tribunal takes into account the judgment of the Tribunal in Aruna Industries case mentioned by the learned advocate. He also submits that the said judgment of the Tribunal in Richardson and Cruddas 1972 Ltd. also relies upon Supreme Court’s judgment in Empire Industries Ltd. and others v. Union of India and others [1985 (020) ELT 179].
4. As regards the question whether the applicant is a manufacturer or not, he reiterates the findings of the Ld. adjudicating authority. He submits that in the peculiar facts of the case, M/s. Mechel Engineers Works are clearly hired labourers and they are, therefore, plainly excluded from the scope of the term ‘manufacturer’ as defined in Section 2(f) of Central Excise Act.
5. We have carefully considered the pleas advanced by both the sides. We observe that this case is squarely covered by the Tribunal’s orders in the case of M/s. Aruna Industries 1986 (008) ECR 166 = 1986(05)LCX0038 Eq 1986 (025) ELT 0580 (Tri.) and of M/s. Steel Authority of India -1988 (036) ELT 316.
6. We are of the opinion that erection or construction on site does not amount to manufacture of goods even if it involves fabrication of some material and creation of structural shapes or structures.
7. In the instant case all that has happened is that some sheds have been constructed or erected. And for this purpose various items of iron and steel have been used and different structurals have been fabricated on the spot.
8. The process is akin to constructing a house from bricks, stones and other material including articles of woods, glass or steel. No one says or was likely to say that a house was thus ‘manufactured’ from bricks or articles of iron and steel, glass or wood. Everyone naturally says in common parlance that a house has been erected or constructed or built with these materials. The position remains the same irrespective of whether it is simple erection/construction process or a complicated one and whether it involves fabrication of some structures and/or some carpentry or smithy work at site. Undoubtedly, technical skill is required for construction of house and one may have to employ mistries, architects, engineers and skilled labourers and in case of some ultra modern buildings, sophisticated and complicated processes/techniques may be employed. But all that does not alter the basic fact that what is involved is creation of immovable property and not goods. As already noted in the instant case all that has happened is that with the help of various articles of iron and steel, sheds have been erected on site. Hence, irrespective of the fact whether it involved a process of fabrication of structurals or not the basic activity remains an activity of construction and erection and the result of all that effort, labour and skill has been creation or coming into existence of immovable property and not goods or products. In this view of the matter we are of the opinion that no process of manufacture was involved; and no goods were manufactured. Hence, there was no cause for issue of the Show Cause Notice; and the Learned Collector has erred in holding the appellants guilty of violation of central excise law and demanding duty and imposing penalty.
9. The learned DR has heavily relied upon the order of the Tribunal in the case of M/s Richardson & Cruddas reported in 1988 (19) ECR-80 = 1988(08)LCX0015 Eq 1988 (038) ELT 0176 (Tri) in which the Tribunal has also referred to the Supreme Court judgment in the case of M/s. Empire Industries. In this case, the Tribunal has distinguished the facts from M/s. Aruna Industries and have emphasised that the Appellants had produced the items in their own factory and sent them back to VSP. The learned DR has urged that once it is held that goods were manufactured then it should not make any difference whether the products are utilised in the same factory or sent elsewhere. We consider that the learned DR is right in pleading that if it can be demonstrated that the ‘goods’ were ‘manufactured’ then it would be immaterial as to whether they were utilised within the factory or sent out & utilised elsewhere. However, as we have noted here, in our view no manufacturing process was involved and no goods came into existence. We are firmly of the opinion that all cases of fabrication do not necessarily amount to manufacture. We respectfully bow to the judgment of the Hon’ble Supreme Court in the case of M/s. Empire Industries and following the same, we are of the view that whether a particular process is a process of manufacture or not has to be determined having regard to the facts and circumstances of each case and in the present case we are convinced on the basis of the records including the uncontroverted submissions of the learned Counsel that all that was involved was erection of sheds on a vacant plot with the help of material supplied to a contractor and no manufacture was involved.
10. We are in full agreement with the views expressed by our brothers in the Tribunal’s order in the case of M/s. Aruna Industries reported in 1986 (008) ECR 166 = 1986(05)LCX0038 Eq 1986 (025) ELT 0580 (Tri.) and in the case of M/s. Steel Authority of India Ltd. reported in 1988 (036) ELT 316. Following the ratio thereof and the reasoning given above we set aside the impugned order and accept the appeal.
Equivalent 1990 (48) ELT 539 (Tribunal)