Full Judgment
doing trading activity. My above finding gets support from the decisions held by the higher authorities as follows :- (1) Re : Otis Elevator Company (India) Ltd. - 1981 (8) E.L.T. 720 (G.O.L) observe: "Government therefore hold that the elevators and escalators erected by the petitioners could not be considered as goods and hence would not be assessable under Tariff Item 68 of the Central Excise Tariff.
Government would however make it clear that the component parts of the elevators and escalators manufactured and cleared from their respective factory(ies) would be chargeable to duty at the appropriate rates. However, no further duty is chargeable when these component parts are assembled at site to erect or install and commission the elevators and escalators in buildings because at that stage the elevators and escalators become a part of the immovable property." (2) Balkrishna Rechhodlal Shah and Ors. v. Assistant Collector of Central Excise - 1979 (4) E.L.T. J377.
"The excise duty falls on the manufacture or production of the goods in question. It is not a duty on sales, therefore whatever may happen at the stage of sale as in this case, that particular manufacturer at the time of sales is supplying to the customer at his request electric unit manufactured by some other manufacturer or customer at his place gets the electric motor fitted into his unit, it is obvious that what was manufactured by the petitioners was not electrical appliance but what can be completed into one whole electrical appliance after purchasing a separate electric motor manufactured by another manufacturer." (3) Machine Products (I) Put. Ltd. v. CCE, Ahmedabad - 1983 (14) E.L.T. 280 (Tribunal).
"The drafting machanism is not a separate machine as such but only a part or section of the ring frame and it comes into being only when all the parts are mounted on the ring frame. This work is done at site. From their factory, the appellants clear only certain parts.
We hold that in the facts and circumstances of this case, what the appellants are doing is only a convertion or modernisation or upgradation job on an existing installed machinery and not the manufacture and clearance of a new machine. There is therefore no justification for including the value of bought out part in the value of their clearance for determining the eligibility under Notification No. 176/77-C.E. Accordingly, we allowed the appeal with consequential relief to the appellants." The order-inoriginal is, therefore, set aside and appeal allowed subject to the verification of purchase bills, invoice etc. The appeal is disposed of accordingly." The facts of the case are that the respondent's factory was closed.
They got the goods manufactured from other factories by supplying in some cases raw materials. The department alleged that since the goods were manufactured on their behalf the goods should be considered as those manufactured by the respondents and therefore the aggregate value of the clearance of the respondents herein shall be governed by Notification No. 77/85. The respondents claimed that the goods were manufactured by other units and that the other units were independent units manufacturing goods and therefore for the purpose of clearance of the goods of the respondents the value of clearance of other units cannot be clubbed for calculating the aggregate value of clearance.
After hearing the submissions the Assistant Collector ordered that the respondents herein were not entitled to the benefit of Notification No.77/85 and denied them the duty exemption.
2. Shri J.M. Sharma the JDR submitted that during the period 1-4-1984 to 1-5-1985 the respondents supplied raw materials in some cases and got the equipment manufactured from other manufacturers; that in some other cases they purchased the finished goods from other manufacturers but all goods were invoiced as if manufactured by them; that Notification No. 77/85 exempts goods (T.I. 68) provided that value of clearance does not exceed Rs. 75 lacs in a financial year; that when the value of goods manufactured by different units was clubbed together it was found to exceed Rs. 75 lacs. He submitted that since exemption limit was exceeded the Assistant Collector rightly denied them benefit of Notification No. 77/85; that the Collector (Appeals) however allowed the benefit which was not legal as the value of the total clearance had exceeded Rs. 75 lacs. He therefore prays that the order of the Assistant Collector may be restored.
3. None appeared for the respondents. Since the issue stands settled by various decisions of this Tribunal and other courts it was decided to proceed with the matter in the absence of the respondents.
4. Heard the submissions of the learned D.R. We find that the only issue in this appeal that requires a decision is whether for purpose of calculating the aggregate value of clearances the goods manufactured and cleared by independent units to whom raw materials were supplied can be added up to determine the exemption limit of Rs. 75 lacs under Notification No. 77/85. We find that there is no evidence on record to show that the units who manufactured the equipment for the respondents were dummy units for respondents and there was no evidence on record to show that the units who actually manufactured the goods were hired labour of the respondents or vice versa. In the absence of such evidence and in view of the well settled position of law insofar as the supply of raw materials is concerned, we hold that the other units from whom the goods were got manufactured were independent units and therefore clearance of those units can neither be clubbed up nor can be taken into consideration while determining the eligibility of exemption under Notification No. 77/85 for the respondents herein. In view of the matter the appeal is rejected impugned order is upheld.