1. These 5 appeals arise from the same impugned order and are therefore being dealt with in this common order.
2. M/s. Ekbote Interior Pvt. Ltd., (hereafter called as EIPL) had 3 Directors - Suhas, Eknath and Damodar. They had workshop at Gultakadi and Showroom at Mukand Nagar at Pune. M/s. Ekbote Brothers Furniture Works (hereafter called as EBFW) was a firm with Dattoba, Eknath and Santosh as partners. All the partners and/or Directors are closely related by blood. They had a workshop in Mahatma Phule Peth and a Showroom at Sadhashiv Peth. M/s. Ekbote Enterprises (hereafter called as EE) were traders in materials required for making furniture as also materials required by interior decorators. They has an office-cum-showroom at Mukant Nagar as also another warehouse. Suhas Ekbote was a Director of EIPL and also the partner of EBFW. M/s. EIPL and M?S EBFW apart from manufacturing furniture, undertook contracts of interior decoration also. The customers would come to these units.
They would explain their requirements. These two units would assess their requirements and give quotations. The materials required would be communicated to M/s. EE Who would supply the requested materials like wood, flanges, paints, fabrics etc. Part of the work would be done in the factories, and part of the work was done on the site by labour contractors using the material supplied by M/s. EE. At the site, furniture, partitions, panels, false ceiling etc. would be manufactured and erected. Labour bills would be raised by the units on the customers.
3. The Jurisdictional Excise officers searched on 29/7/97 these 3 premises and seized certain records Statements of the persons in charge of the three units, their contractors and some of the buyers were recorded. Some furniture was also seized. On the conclusion of investigation, Show Cause Notice dt. 3/4/98 was issued. It was alleged that both EIPL and EBFW manufactured goods in the same Gultakadi premises. They had however maintained the accounts so as to show manufacturing at independent premises to secure the advantage of the value based SSI exemption. It was further alleged that the accounting was so organised as to how that the customers had bought the materials from M/s. EE and that the actual manufacturing was done by third persons in the customer's premises. It was alleged that the three units were in fact a single entity.
4. The allegation as to commonality of the two manufacturing units was sought to be established on the grounds of common machineries, common documentation, common labour bills, utilisation of common facilities etc. It was further alleged that whereas furniture Common Control was made in the factory premises, it was shown as if the furniture had been manufactured at the customer's premises and had been brought to the factory merely for polishing. Certain internal instructions recovered from the office were cited to show that the procedure adopted was meant to evade duty. It was alleged that the consultancy, polishing and repairing charges were inflated to suppress the cost of manufacture of furniture. Equites were made with the customers of the Appellants. The statements of the customers cited in the Show Cause Notice revealed that the customers had claimed that they had placed order for furniture only the two units. The payment was intentionally split for supply of raw materials and for labour charges. It was claimed that the buyers had not received the material but had received readymade furniture only. The allegation was made in the Show Cause Notice that before the searches dual billing was undertaken separately for materials and for labours and that after the searches, the Appellants had taken recourse to show inflated bills for repairs/polishing/consultancy purposes.
5. The Show Cause Notice alleged that apart form the tables, chairs etc. Which were clearly excisable, the fixtures, fittings etc. which were later affixed to the earth were also at the stage of their manufacture prior to such affixation excisable goods. As regards valuation it was aggeged that although the clients were billed separately for the fabrics etc, the value of the goods supplied by M/s.
E.E. was required to be added when computing the value of the goods cleared by M/s. EPIL and M/s. EBFW. On the basis of the facts hitherto disclosed the allegation as to deliberate suppression etc. was made for invoking the extended period in terms of proviso to the Section 11A(1) of the Central Excise Act, 1944.
6. The duty evaded was quantified at Rs.1,04,96,115.68.Allegation as to penalty were made. The furniture seized as also the land, building etc.
were alleged to be liable to confiscation.
7. The Notices filed their replies. They denied the allegation as to commonality and unity of the 3 units. It was argued that they were not the manufacturers but that the carpenters and contractors who manufactured the goods at the site of the customers were the manufacturers. On this ground it was denied that any liability could accrue to the Appellants' units. As regards the manufacture done by M/s. EIPL and M/s. EPFW, it was claimed the respective clearances were within the permissible limits of duty-free clearances under the notifications. It was further claimed that in computing the value of clearances the goods affixed to the earth should not be taken into account. A claim was also made that the furniture was handicraft and was therefore not taxable. It was claimed that individual units dealt with their contractors as also among themselves on the principal to principal basis.
8. Various claims made in the replies were reiterated before the Commissioner in personal hearing. The Commissioner confirmed the demands, imposed penalty on the Notices, confiscated the furniture, land and building premise, but permitted their release on redemptions fines. The present appeals have been filed against this order.
9. We have heard shri V.S.Nankani for the Appellants and S/Shri A.K.Chatterji, and Deepak Kumar, Departmental Representatives. Both sides were given liberty to file summaries of their arguments. We have examined the summaries also.
10. The important ground made is that where the furniture was manufactured in the premises of the customers, neither M/s, EPIL nor M/s. EPFW could be called as the manufacturers. It was claimed that the only manufacturing work was done by the contractor working on the principal to principal basis with the Appellants. It was claimed that the liability to pay duty if any would rest on those contractors and not on the respondents. We have considered these submissions.
11. Section 2(F) of the Central Excise Act, 1944 defines a manufacturer as follows: (i) incidental or ancillary to the completion of a manufactured product; and (ii) which is specified in relation to any goods in the Section or Chapter notes of the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account".
12. Although the definition of 'manufacture' has undergone a change, the definition of "manufacturer" has remained the same. It would appear that the definition evolved in a period where goods were manufactured by individuals who occasionally also employed "hired labour" in the manufacturing process. Thus, if the physical manufacture was done by a labourer, the liability to pay duty remained with the person who had hired the labour. As the industry evolved, the independent job workers emerged. For quite same time, there was a conflict of opinion as to whether the principal manufacturer was the 'manufacture' for the purpose of Central Excise or whether it was the Job worker. In establishing the identity of the manufacturer, during those early years the emphasis was placed on the ownership of the goods.Thus in a landmark judgement of the Supreme Court in the case of Shree Agencies V/s. S/K/Bhattacharjee (1977-1) E.L.T.-J(168), The supreme Court was examining the entitlement of the Appellant to a notification which exempted the products of a number of powerlooms grouped together. The yarn was given to the powerloom operators for weaving into cloth. On record it was shown that the yearn was purchased by the powerloom owners but in reality the ownership continued to vest with the master weaver. Although only the job charges were paid to the weavers, the Supreme Court held that interest in the yarn remained with the master-weaver throughout and also observed that the billing and transport charges were paid by him. In this situation the master weaver was held to be the real manufacturer although the physical manufacture was done by other persons. The same line of reasoning was followed by Supreme Court in their judgement in the case of Bajrang Gopilal Gajabi reported in [1986 25 (E.L.T.)609].
13. But with the increase in scale and also the increase in the complexities of the manufacture, it was not possible to get the work done by utilising hired labour. The work of the manufacture came to be entrusted to the job worker who had a separate legal identity. Some were firms and some were Ltd. Companies. These job workers obviously were not "Hired labour" and therefore had to be held as independent manufacturers. The Gujarat High Court in their judgement in the case of Apex Electricals Pvt. Ltd., 1992 (61) E.L.T. 213 held that ownership of the raw material was not a relevant factor in determining the identity of the manufacturer. The confusion as to the identity of the manufacturer when the physical manufacture was done by an entirely independent from the one who gave out the job continued for quite sometime. A view was held for a very long time that the supplier of the raw material continued to be the manufacturer.
14. This was most prominent in the case of grey fabrics supplied to the independent processors of fabrics. Such traders were required to file an application for exemption from licensing control and had to undertake that they would pay the duty payable in case of default by the processors. This was embodied in Notification 305/77 C.Ex.
initially and later in Notification No. 27/92. The second area in which job working prevailed was the manufacture of medicaments. It was common for a company to obtain registration from the Food & Drug Administration without having any manufacturing facility and to get the pharmaceuticals manufactured from another person having a factory.
15. However, at the same time the Court as well as Tribunals were aware that the person who (corporate or individual) undertook the physical manufacture could not continue to be classified as "Hired labour" Therefore, the law evolved that the manufacturer in terms of the said section was not the customers or the primary manufacturer but that it was the job worker. One of the earlier judgements to this effect was of the Andhra Pradesh High Court judgement in the case of Andhra Re-Rolling Works 1979 (4) E.L.T. (J600) (A.P.) The Supreme Court judgement in the case of Ujagar Private Ltd., settled the issue finally [(1988 (38) E.L.T. 535 and 1989 (39) E.L.T. 493]. In the judgement the Supreme Court held that the job worker who processed the fabrics was the "manufacturer" and not the trader who entrusted the grey fabrics to him.
16. The distinguishing features between "Hired labour" and "Independent job worker" is necessarily dependent upon the nature of relationship between the person who entrusts the job and the person who executes the job. If it is in the nature of agency then the first person would become the manufacturer. If it is in the nature of Principal to Principal then the executor becomes the manufacturer.
17. During the evolution of this law, a number of disputes over valuation developed. The existence of two manufacturers- one in law and one in fact create hundreds of disputes. The dispute was finally laid to rest by the Supreme Court by their judgement in the case of M/s.
Ujagar Prints Ltd. and others (supra).
18. The first issue for decision in this case is the identity of the manufacturer of the furniture. Where the furniture is manufactured by a manufacturer in his own premises, then there would be little dispute as to his identity as the manufacturer. The difficulty arises where a person takes orders for the manufacture of furniture. He thereafter gives a contract for manufacture of the furniture to another person. In that circumstance, the claim made by the first person is that not he, but the second person i.e. person who actually makes the furniture is the manufacturer. It is contract that the agreement to supply furniture is between the buyer and the person who takes the order and undertakes to make the supply. But in terms of the law relating to the Central Excise, such contractual obligation may not make him (the person undertaking the supply) the "manufacturer".
19. In the present case it is the persistent claim of the Appellant that they had done certain functions viz. soliciting and accepting orders, (2) designing the furniture (3) giving a contract for manufacture of the furniture (4) supplying the materials to the contractor and (5) giving finishing touches to the goods manufactured by the contractors. It is their claim that except where the goods were manufactured in their factory, the liability to pay duty was not fastened upon them.
20. Repeatedly, during the arguments Shri Nankani was asked by the Bench whether the contractors had performed the work entrusted to them under a specific contract. The reply was that there was an oral contract or implied contract but there was no written contract. In the absence of a written contract it is extremely difficult for us to accept the statement that the relationship between the Appellants and their contractors were on a Principal to Principal basis. We have examined the instances placed on record by the Appellants to sustain their claim. A specific case of the furniture manufactured for one Mr.
Braganza was cited. The case has been highlighted in the written submission made after the conclusion of the hearing. Shri Braganza appeared to have a continuing account with M/s. Ekbote Interiors. The disbursement against the deposit made by the investor was shown to a number of persons of varriying amounts. There is the bill on Shri Braganza dt. 31/8/94 for "Labour charges". One Shri Ramdas Paswan was alloted some work. The copy of the communication placed on record is undated. Although it refers to an undated contract work agreement, no such agreement is placed on record. The value of the work allotted is Rs. 8865/-. It specifies that the work is of polishing only. The time schedule is not given. A return memo of account dt. 3/10/94 is on record. Another memorandum is given to one Iqbal Shaikh for cushioning work of the same lot. This is dated 13/8/94. Acknowledgement memorandum even the name of the unit giving order to Shri Hussain Shaikh for work to be done for Mr. Braganza is not appearing thereupon. It is emphasised that these extracts and illustrations are from the material relied upon and emphasised by the Appellants. The material makes it very clear that payments were made by the Appellants to certain workers for certain action undertaken by them at the customer's site for the furniture being manufactured there. Thus, one person was entrusted with cushioning and another was entrusted with polishing. These persons were not working in concert but individually performing single operations which operations did not result in manufacture of furniture. Therefore, they were clearly hired labour performing single acts in the long chain of manufacture.
21. Affidavits have been placed on record by the so called contractors.
We have seen the affidavits. The deponents are carpenters. The affidavits are identically worded. A typical affidavit is reproduced below: I Mr. Mahadev Mungare aged 52 residing at Vitthalwadi, Pune 51 business Carpenter make the following affidavit on solemn oath.
I am a carpenter artisan by birth and undertake the work of making wooden furniture for past 23 years.
I have team of semi skilled and unskilled workman who work with me on daily payment basis/piece rate basis.
I most of the times work at the house of the customers or at his site. Such work is undertaken by me on piece rate basis. All required raw material is supplied by the customers.
I take help of architects/interior decorators for getting these jobs who work as co-ordinators between the customers and myself. My charges for the job are negotiated by me directly with the customers.
Ekbote Interiors P. Ltd. are interior decorators. I get many such jobs through them for past many years and the jobs are performed by the carpenters working with me at various sites of customers on the raw material supplied by the customers.
I have been paid my for the work untaken by me asper my agreed rates with the customers. These payments are sometimes received directly from the customers and sometimes through Ekbote Interior Pvt. Ltd., The affidavit is true and correct and is made at Pune on the date mentioned below.
22. The affidavit does not suggest existence of any contract between the deponents and the appellants. It makes out as if there is a contract between the deponent and the customer. But that suggestion is also not supported by any contract. It is immaterial whether in some cases he was paid by the purchaser because the job of undertaking a certain process was entrusted to him by the present appellants. It is not his case was that he was entering into a contract with the customer and using the services of the present appellants on payment of fees to them. It is also immaterial whether he was assisted by other persons.
The claim of the principals to principals relationship between the workers and the Appellants is not borned out of these affidavits.
23. Statements of certain customers are on record. Both sides have relied upon these statements to make their case. We have seen these statements. One Shri Sharad S. Javalagi has given a statement on 23/2/98. The sequence of events leading to the making of furniture at his place was as follows: 24. He first went to Ekbote Interiors. Shri Mohan Ekbote discussed his needs and the site was visited. At their recommendation, Shri Jawalgi went to Ekbote Interior to select raw material which was supplied to him. As per his statement he appointed a team of carpenters to make the furniture as per Mr. Ekbote's recommendations. He however, qualified the statement by saying that it was the responsibility of Shir Ekbote to constantly monitor the supply of raw materials and constantly monitor the actual making of the furniture at site. The payment shown by him are Rs.1,40,000/- to Ekbote Interiors for "Consultation, polishing, painting etc.", RS.2,60,000/- to Ekbote Interiors for "Raw materials" and Rs.30,000/- to one Jagtap Gawde as "Labour charges". He further avers that he did not know the workers personally but had make the payment to them "After getting the information from Shri Mohan Ekbote". When he was shown documents made out as if it was he had asked M/s. Ekbote Interiors to paint, polish etc. he showed total ignorance.
25. The pattern of payments made the amounts received by the "designers" as compared to those received by the "Contractors" and the existence of constant supervision on the two workers by M/s. Ekbote Interior would show that the workers were not independent contractors operating on their won but that they were merely hired labourers of Ekbote Interiors.
26. There is a statement of Shri Govind Dattaba Ekbote made on 29/9/97.
In this statement he continues to call the labourers as contractors or sub-contractors and refers to certain agreements with them. The agreements are however nowhere on record. In the statement he has averred that he personally went and supervised the work carried on by the workers.
Shri Sughas Ekbote also made a statement dt. 29/8/97 where he claimed to have enclosed a copy of the agreement. However, these are not the agreements but he memoranda and contract memos as we have observed above.
27. A very peculiar picture emerges from the pattern of billing. In the case of Shri Jawalgi discussed above, the two workers were paid a total of Rs.30000/- for making the furniture and a sum of over Rs.1 lakh was charged by the Appellants for polishing. It is the disproportionate distribution that indicates the reality of the appellants being the manufacturers. Even if for the sake of arguments, the workers were held to be independent contractors, the final process of finishing the furniture by polishing and painting was undertaken by the Appellants themselves. It was held by the Supreme court that manufacturing was a combination of various processes and that a particular process would amount to 'manufacture' which rendered the product marketable. In the case of the designer furniture marketability is not achieved unless the furniture is fully finished and where the final finishing was imparted not the workers but by the Appellants themselves, they wanted quality for the term "manufacturer".
28. Thus, on the failure of the Appellant to show that there existed a Principal to Principal relationship between themselves and the carpenters and polishers etc. manufacturing the furniture at site and on the inacequancy of the submissions made byu the workers of the Appellant to establish their relationship and on the degree of Supervision exercised by the appellants, and on the finding that the final process converting the rough furniture into fully finished furniture was undertaken by the Appellants themselves, it has to be held that the Appellant units viz. M/s. EIPL and M/s. EPFW were manufacturers of the furniture. This is so even if some of the furniture was made at the site of the customers.
29. Considerable space was devoted in the proceedings to the type of invoice. Type 'A' invoices were issued where the Appellant manufacturers had manufactured the furniture entirely in their own units. Invoices of other types were issued where the work was done at the site of the customers. The total payment made by the customer was split into heads such as consulting, material, labour etc. and separate billing was accordingly made. The Appellant before the Commissioner and before us also claimed that invoices of type 'A' would alone would qualify for computation of the value of the furniture made by the Appellants. However, in view of our findings above to the effect that M/s. EPIL and EPFW were the manufacturers, segregation and different nomenclatures of the invoices does not have any meaning.
30. Where the furniture was made at the customer's premises, the material was supplied by M/s. E.E. it is claimed that in not all cases the supply was made by E.E. but in certain cases the customers had purchased the raw material from outside. It is not denied that the material sold by M/s. E.E. was specifically for the purpose of manufacture of furniture. Therefore, value of all such material would form part of the furniture manufactured by M/s. EIPL and M/s. EPFW.Even where the material was not supplied by M/s. E.E. the value of material procured by the customers was equally addable to the assessable value of the furniture. This is the law that emerges from the Supreme Court's judgement in the case of Ujagar Prints (supra). The relationship or lack thereof between E.E. and the other two units does not have any bearing on the ineludibility of the cost of the raw materials in the value of the furniture.
31. The claim was also made that what was made by the two manufacturers was "handicrafts" and therefore exempted from payment of duty. Reliance has been place on the judgement of the Supreme Court reproduced in 1996 (83) E.L.T.32. A certificate from an art expert has also been placed on record. In the cited judgement the Supreme Court has made it clear that furniture as such did not qualify as "Handicrafts". Specific requirements have been laid down by the Court on fulfilment of which alone as furniture may qualify as "Handicrafts". For claiming the benefit to the Notification No. 76/86- CE very substantial effort has to be undertaken by the claimant. No such effort is made here. This notification does not figure in the documents filed by the manufacturer of Appellants units claiming exemption from payment of duty. Perhaps for these reasons the Ld. Counsel did not press the ground in the arguments.
33. The next important issue is whether the 3 Appellant units were in effect one. If the answer is in the positive, then the clearance of the excisable goods would require to be combined.
34. The Show Cause Notice sustains this charge saying that both EIPL and EPFW were sharing the same factory premises at Gultekdi. The existence of machinery belonging to one unit in the premises of another unit is also cited as separate evidence. The Registers etc. of both the manufacturing units were found to have been maintained at Gultekdi. All orders received by both units upto April, 1996 were recorded in the same Register. The Workers attendance records were maintained at Gultekdi. It was alleged that the premises occupied by all the firms were common at Mukund Nagar, Pune. A common Accountant was also employed. The Show Cause Notice also cites certain customers in establishing unit of the firms. One Shir Balsule claimed that the furniture was purchased from EIPL although the orders were split into purchase or raw materials, labour etc. However, the fully furnished furniture was received by them. Similar depositions were made by other industrial buyers.
35. The allegations of unity of two or more manufacturing units are frequently made. There is a very substantial case law laying down the parameters on which the clubbing is to be established.
36. The leading judgement is that of the Tribunal in the case of J.N.Marshall Pvt. Ltd. V/s. C.C.Pune, 1997 (19) RLT Pg. 71. In para 11, the Tribunal observed as under: "What we understand from the above decisions is that regard must be had to all the circumstances established in a given case but emphasis must be on common control of production and sales or on management control and special financial relationship existing between the units or profit sharing or financial flow back. If the combination of circumstances create a pattern indicative of the clearances from the plurality of units being made by "a manufacturer" clubbing is warranted." 37. This judgement has been followed in a number of cases thereafter including that of Metapack and others (2040 R.L.T. 1039).
38. In the present case it is not denied that the persons Incharge of all the units are blood relations.
39. To the various allegations made supporting claim of unity, the Appellants had given explanation. Reliance was placed on the affidavit of the work-force. The affidavits are stereotype repetitions and the fact that the Commissioner had not discussed their relevance does not support the Appellant. In fact, some of the affidavits have been taken up for scrutiny by us in our discussion above. The contentions made in the affidavit do not reflect at all the unity or otherwise of the two Appellant manufacturers.
40. To escape the reality of being clubbed, very often the manufacturers resort to devices created to establish separate status.
The present Appellants are relying upon the fact that MSEB and Municipal Bills were paid separately. Where the premises are leased from each other, payments have been made and are reflected in the final accounts. But in terms of observations made in the J.N. Marshall case the reality has a way of surfacing.
41. The statement of Suhas Ekbote, Director of EIPL recorded on 29/7/97 gives an insight. After explaining the methodology adapted for separate billing etc. he says as follows:- "We did all this as per the understanding between us. Thereafter, as stated above, raw material bill is issued by Ekbote Enterprises and labour charges bill is issued by Ekbote Interiors. We did all these things with intent to see that manufacturing activity is not on account of one single firm and it is bifurcated so that the taxes are minimised." 42. This statement is made in the hand of Suhas Ekbote. On a direct question being asked, then Counsel had clarified that this statement has not been retracted.
43. At a later date, this statement was attempted to be watered down by separate communication made on the ground that he was not allowed to present his case. But the later submission does not amount to retraction.
In view of this specific voluntary statement the allegation that the clearance of the two manufacturing units required to be clubbed together stands established.
44. Eknath Ekbote during recording of his statement on 21.8.1997 was asked to explain how as per the Trading Account of EIPL, the sale of goods was of the value of Rs.1,66,161/-when the difference was Rs.3,29,306/-. He could not answer but at a later date took the plea that the difference was on account of Trading activity necessitated by resale of goods. The later justification does not answer the discrepancy at all. The discrepancy is due to the fact that in bifurcating the sales etc. figures, due care was not taken.
45. The show cause notice in paragraph 6.5.2 discloses the minutes of the meeting held in 15.11.96. The minutes were wrong the seized documents. These minutes gave specific instructions as to the manner of taking orders. It divided the work between the show room and the factory. It instructed the manner in which the buyer was to be billed.
The last clause said: "In respect of all orders to be received henceforth material bill will be issued from EB and labour charges will be issued from showroom".
They were very clear, very terse and were expected to be obeyed without default. The instructions did not specify and particular unit but applied to all units. When Eknath Ekbote was specifically asked about the universal application he said that they were for educating all concerned about the business transactions.
These instructions reveal the common control exercised by Mr. Govind Ekbote over all the three units. This common control is the hall mark of the existence of unity of different units in terms of the J.N.Marshal Judgement cited Supra.
46. We therefore uphold belief that the clearance of the units is required to be clubbed together.
47. The third important issue is whether the demand is affected by limitation. The Claim is made that the Appellants were under bonafide belief that the work done by them did not qualify for levy of excise duty. This is further amplified by the statement that the services rendered as consultation did not qualify towards duty and that the manufacture was done by the independent contractors., Reference is made to Trade Notice dated 8.1.1999 issued by the Pune Commissionerate and the correspondence entered into by assessees with the CBEC. We have seen these documents. The reference made to the Board is dated 9.7.1997. The query relates to fixtures and civil structures. It does not relate to items of furniture delivered. The other reference to the Board dated 21.11.1997 raises the question as to who the manufacturer was in the circumstances involved in the present set of appeals. It is significant that the Board did not respond except to direct them to approach the jurisdictional Chief Commissioner. We also observe that the premises of the Appellant units were searched in July, 1997 after inquiries being conducted over an earlier period. The Ld. Commissioner was not correct in disputing the correspondence as motivated. The Trade Notice dated 20.1.1998 issued subsequently has also been examined by us. It is our impression that it does not give much guidance to either the trade or the Department.
48. Furniture was an excisable article all along and more specifically after adoption of international tariff in 1986. Therefore the plea of lack of knowledge would not sustain.
49. The show cause notice at paragraphs 6.5.1 discloses the advise given by some Consultant which was found amongst the document seized.
The summary as given in the paragraphs reads as below:- (iii) An impression should be given to the customer as if the furniture is being made at his place.
(iv) Billing method- Order only for labour work by EIPL/EB will be issued from Show Room.
(v) Material Proforma Invoice/Regular bill issued from Showroom of Enterprises will go to factory along with labour work order.
(vi) Signature of Customer should be obtained on material bill & bill handed over to the customer.
(vii) While giving delivery of the Order "Polishing Authority" will be along with the Challan (Delivery Challan).
The running labour charger bill pertaining to goods being delivered will remain alongwith the order (labour charge order).
The meaning of the advise is obvious in that it suggests the manner in which the facade was to be created to hide the fact that all units were infact one and to project the separate existence of the units.
50. Thus, and elaborate scheme was drawn up by the Appellant to escape the duty net as has been observed by us above. In the impugned order the Commissioner has discussed how the pattern shown on paper by the present Appellant was insufficient to mask the reality. It has come in the evidence that after the goods were manufactured at the customer's place, they were bought to the units of the two Appellant manufacturers for finishing, polishing etc. The Commissioner relied upon the statement of some customers that this was a paper transaction and that the complete goods were received by them at site. He has also referred to the advice given by the consultants leading to the splitting of documents. The evidence on record and the discussion makes it clear that the Appellants were not only aware of the requirement of payment of duty buy that they had taken elaborate measures to reduce the burden below the figure permitted in the Exemption Notification. It is therefore to be held that the arguments on limitation have no force.
51. We now come to the minor issues. One is regarding the computation of duty. It is claimed that the Department has taken the value of the partition, ceiling and panelling. It is claimed these are permanently attached to the earth and are not goods. We see merit in this claim. In fact the work relating to false ceiling would be a part of the structure and would not qualify as furniture at all. The excitability of partition, false ceiling etc. is a question of fact being dependent upon the degree of their attachment to earth. If they are permanently placed and are parts of the Structure, then the excitability would not attract. The parts there of before fitment, may attract duty if they fit the description in the Tariff Entry. But this is a question of fact and cannot be determined on the examination of the invoice and bills alone, without ascertaining the factual aspects.
52. In computing due provisions would also have to be made for deduction as permitted under the law. For this purpose and on this aspect the proceedings would have to go back to the Commissioner.
53. In computing the quantum of duty the facility for Modvat credit on the inputs used would also have to be extended where the same is supported by documentation. In extending this facility the failure to file necessary declaration etc. need not be held against the assessee.
54. In the Show Cause notice duty has been demanded from both EIPL and EPFW. Where the units are held to be one in law, the demand should be made only form the main unit. This is as per the law given by the Supreme Court in Gajanan Mills Case. The Commissioner shall keep this in mind.
(i) the manufacturers of the furniture were not the outside contractors but that the furniture was manufactured by the Appellant units viz. EIPL/EBFW; (ii) the clearance of these 2 units is required to be clubbed together for computing the duty forgone; (iii) the extended period for making the demand is correctly and legally invoked.
(iv) the duty leviable on the furniture manufactured has to be re-worked by giving deduction for the amount received by the Appellant for manufacture, fixtures etc. which were embedded to the earth. The duty so computed will have to be demanded from the principal unit only; (v) In computing the duty due deductions shall be given and modvat credit where available shall be adjusted.
56. For these purposes, the proceedings are remanded to the jurisdictional Commissioner of Central Excise. He shall be free to determine the quantum of penalty on such re-determination. he shall also deal with the aspect of confiscation. In the denovo proceedings he shall give adequate opportunities to the Appellant to state their case and the appellants shall cooperate finally.