The Chief Engineer (irrigation) Vs. the Commissioner of Central - Court Judgment

Excerpt:
1. by this restoration application, application is seeking restoration of appeal which was dismissed by final order no. 2277/1999 dated 29.11.96 dismissing their appeal in terms of section 35f of the central excise act, 1994.2. the appellants have filed all the correspondence and challans to show that they have complied with the terms of the tribunal's stay order no. 343/96 dated 14.10.96 by depositing rs. 2 lakhs by way of adjustment challan no. 5 dtd 22.5.97 issued by pao (east), chennai within time and had reported compliance to the tribunal as well as to the authorities. further, when the matter came up before the tribunal to note the compliance, same had not been linked which resulted in dismissal. they seek for restoration of appeal and also for final disposal of the same. it is contended that the issue pertained to excisability and dutiability of pcc slabs/blocks. the tribunal in the appeal in larger number of cases have held after examining the contracts and agreements that manufacture was carried out by the contractor and the terms of the contract was on principal to principal and that the demands are not liable to be paid by the appellant. they rely on final order no. 2380 to 2382/99 dated 15.9.99 by which their appeals have been allowed following the ratio of their own orders in final order no. 1660 to 1664/98 dated 21.8.98.3. shri natarajamani, senior drafting officer appears for appellants and seeks for restoration of appeal and submits that facts are not same in terms of final order referred to above.5. we have carefully considered the submissions and have perused the paper book. appellants have produced challan no. 104-aa-000b dated 12.5.97 evidencing the deposit of rs. 2 lakhs in terms of the stay order. as the stay order has since been complied, therefore, the dismissal of appeal by final order no. 227/96 dated 29.11.96 is recalled and appeal e/840/2000 is restored to its original number.6. as the issue is covered, appeal itself is taken for disposal by final order no. 238 to 2382/00 dtd. 15/9/99 this bench has allowed the appeal of appellants on the ground that they are not manufacturer and they are not liable to pay duty. the findings recorded in para-7 to 11 is reproduced herein below :- 7. on a careful consideration of the submissions, and on perusal of the entire records and also the judgment rendered by tribunal on similar issue in the case of tneb by final order no. 1660 to 1664/98 dt 21.8.98. we notice that the issue is identical and hence by applying the ratio thereof, we grant waiver of pre-deposit of the amounts and stay its recovery by allowing the stay applications. as the issue is covered, the prayer for disposal of the appeals is accepted and same taken-up for disposal. 8. on a careful consideration of the submissions and on perusal of the records, we notice that the appellants were awarded with a contract by the republic of india and the european community of india (ecc) for aiding a project called "modernisation of tank irrigation systems in tamil nadu" for improved water management and reduction of losses. the scn and the narration of facts in each of the order discloses about these facts. it is revealed from the facts of each case as narrated by respective commissioners that appellants were awarded individual contracts to contractors independently on principal to principal basis to carry out the manufacture of cement blocks/slabs to be casted in the centralised places as indicated in each of the appeals. before the authorities it was indicated that appellants were only provided raw material namely cement, stone, jelly, sand and these activities were independently carried out in terms of the contract awarded and each of the contracts and the terms of the contract, on a perusal, clearly indicates that it is on principal to principal basis and not a labour contract. 9. we have perused in detail these contracts, which is placed on record and which confirms the position that the terms are identical in nature to the one examined by the tribunal in the case of tneb (supra). we notice from the correspondence that the superintendent had referred to the work carried out by individual contracts in his correspondence in 1989 and had required the appellants to give further details. appellants had furnished details of each of the contracts/agreements entered into and clearances made during the year 1989-90 and hence the show cause notice issued in respect of goods after a lapse of several years is clearly barred by time when all the details were known to the department. further the agreement clearly indicated that the work was carried out on principal to principal basis by the contractors as their details were furnished to the department from time to time. the respective show cause notice itself gives the details furnished by the appellants in annexures. therefore the facts of the contracts, no. of blocks/slabs manufactured independently by each contractor is tallied with the show cause notice. when these facts wee clear, therefore the department ought to have made to accept the contractors as responsible for discharge of excise duty. 10. at this stage, ld. advocate submits that the item manufactured also is not 'good' and however as the issue is limited to the points raised, he reserves the arguments on the manufacture in the appropriate case. 11. we have considered the plea. we notice that we have not looked into the aspect of items being goods or not. the appeals are disposed of solely on the ground that the demands ought to have raised on the independent contractors as the work carried out is found to be on principal to principal basis and that the demands were also time barred. applying the ratio of the tribunal judgment rendered in the case of tneb (supra), the impugned orders are set aside and the appeals are allowed.7. we have examined the records of this case also and we notice from the agreements produced that the relationship between the appellant and their contractors was on principal to principal. the same terms of agreement and contract is found in the earlier orders also wherein the tribunal has categorically held that appellant is not a manufacturer.therefore, respectfully following the ratio of the above noted final order, the impugned order is set aside and appeal allowed with consequential relief, if any, as per law.

Judgment:
1. By this restoration application, application is seeking restoration of appeal which was dismissed by final order No. 2277/1999 dated 29.11.96 dismissing their appeal in terms of Section 35F of the Central Excise Act, 1994.

2. The appellants have filed all the correspondence and challans to show that they have complied with the terms of the Tribunal's stay order No. 343/96 dated 14.10.96 by depositing Rs. 2 lakhs by way of adjustment challan No. 5 dtd 22.5.97 issued by PAO (East), Chennai within time and had reported compliance to the Tribunal as well as to the authorities. Further, when the matter came up before the Tribunal to note the compliance, same had not been linked which resulted in dismissal. They seek for restoration of appeal and also for final disposal of the same. It is contended that the issue pertained to excisability and dutiability of PCC slabs/blocks. The Tribunal in the appeal in larger number of cases have held after examining the contracts and agreements that manufacture was carried out by the contractor and the terms of the contract was on principal to principal and that the demands are not liable to be paid by the appellant. They rely on final order No. 2380 to 2382/99 dated 15.9.99 by which their appeals have been allowed following the ratio of their own orders in final order No. 1660 to 1664/98 dated 21.8.98.

3. Shri Natarajamani, Senior Drafting Officer appears for appellants and seeks for restoration of appeal and submits that facts are not same in terms of final order referred to above.

5. We have carefully considered the submissions and have perused the paper book. Appellants have produced challan No. 104-AA-000B dated 12.5.97 evidencing the deposit of Rs. 2 lakhs in terms of the stay order. As the stay order has since been complied, therefore, the dismissal of appeal by final order No. 227/96 dated 29.11.96 is recalled and appeal E/840/2000 is restored to its original number.

6. As the issue is covered, appeal itself is taken for disposal by final order NO. 238 to 2382/00 dtd. 15/9/99 this Bench has allowed the appeal of appellants on the ground that they are not manufacturer and they are not liable to pay duty. The findings recorded in para-7 to 11 is reproduced herein below :- 7. On a careful consideration of the submissions, and on perusal of the entire records and also the judgment rendered by Tribunal on similar issue in the case of TNEB by final order No. 1660 to 1664/98 dt 21.8.98. We notice that the issue is identical and hence by applying the ratio thereof, we grant waiver of pre-deposit of the amounts and stay its recovery by allowing the stay applications. As the issue is covered, the prayer for disposal of the appeals is accepted and same taken-up for disposal.

8. On a careful consideration of the submissions and on perusal of the records, we notice that the appellants were awarded with a contract by the Republic of India and the European Community of India (ECC) for aiding a project called "Modernisation of Tank Irrigation Systems in Tamil Nadu" for improved water management and reduction of losses. The SCN and the narration of facts in each of the order discloses about these facts. It is revealed from the facts of each case as narrated by respective Commissioners that appellants were awarded individual contracts to contractors independently on principal to principal basis to carry out the manufacture of cement blocks/slabs to be casted in the centralised places as indicated in each of the appeals. Before the authorities it was indicated that appellants were only provided raw material namely cement, stone, jelly, sand and these activities were independently carried out in terms of the contract awarded and each of the contracts and the terms of the contract, on a perusal, clearly indicates that it is on principal to principal basis and not a labour contract.

9. We have perused in detail these contracts, which is placed on record and which confirms the position that the terms are identical in nature to the one examined by the Tribunal in the case of TNEB (supra). We notice from the correspondence that the Superintendent had referred to the work carried out by individual contracts in his correspondence in 1989 and had required the appellants to give further details. Appellants had furnished details of each of the contracts/agreements entered into and clearances made during the year 1989-90 and hence the show cause notice issued in respect of goods after a lapse of several years is clearly barred by time when all the details were known to the department. Further the agreement clearly indicated that the work was carried out on principal to principal basis by the contractors as their details were furnished to the department from time to time. The respective show cause notice itself gives the details furnished by the appellants in annexures. Therefore the facts of the contracts, no. of blocks/slabs manufactured independently by each contractor is tallied with the show cause notice. When these facts wee clear, therefore the department ought to have made to accept the contractors as responsible for discharge of Excise Duty.

10. At this stage, Ld. Advocate submits that the item manufactured also is not 'good' and however as the issue is limited to the points raised, he reserves the arguments on the manufacture in the appropriate case.

11. We have considered the plea. We notice that we have not looked into the aspect of items being goods or not. The appeals are disposed of solely on the ground that the demands ought to have raised on the independent contractors as the work carried out is found to be on principal to principal basis and that the demands were also time barred. Applying the ratio of the Tribunal judgment rendered in the case of TNEB (supra), the impugned orders are set aside and the appeals are allowed.

7. We have examined the records of this case also and we notice from the agreements produced that the relationship between the appellant and their contractors was on principal to principal. The same terms of agreement and contract is found in the earlier orders also wherein the tribunal has categorically held that appellant is not a manufacturer.

Therefore, respectfully following the ratio of the above noted final order, the impugned order is set aside and appeal allowed with consequential relief, if any, as per law.