Manufacture by contractor and excisability of site-fixed furniture required fresh adjudication after examining sub-contracts and attachment to property.

The dispute concerned whether furniture items were manufactured by the appellants or by independent contractors, because that determined who was liable to duty. The Tribunal required examination of the sub-contract agreements to decide whether the arrangement was genuinely on a principal-to-principal basis and therefore who answered as manufacturer. It also required reconsideration of whether furniture fixed at site had become immovable property or remained excisable goods, by assessing the nature of attachment and removability without substantial damage. The impugned order was set aside and the matter remanded for fresh adjudication, with limitation, assessable value and Modvat credit also to be examined if duty was found payable.

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Issues: (i) whether the furniture items were manufactured by the appellants or by independent contractors so as to determine the person liable to duty; (ii) whether the articles fixed at site were excisable goods or immovable property and whether the connected questions of limitation, assessable value and Modvat credit required reconsideration.

Analysis: The record showed that the adjudicating authority had proceeded mainly on the footing that the appellants remained responsible for completion of the work and that the labourers engaged at site were hired labour. The remand direction required examination of the agreements with the sub-contractors to ascertain whether the relationship was truly on a principal to principal basis, since that question was vital to identify the manufacturer. On excisability, the earlier remand had required consideration of whether the furniture came into existence only upon attachment to walls or floors, and whether such items could be removed without substantial damage while retaining marketability. The Tribunal also noted that the pleas on limitation, assessable value and Modvat credit had to be examined if duty was ultimately found payable.

Outcome: The impugned order was set aside and the matter was remanded for fresh adjudication after considering the relevant agreements, the nature of attachment of the furniture items, and the ancillary pleas raised by the appellants.

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