2001 (1) TMI 189 - AT - Central Excise

Manufacturer liable for excise duty on furniture items, marketability key. Remand on limitation period, cum-duty price.

INTERSCAPE Versus COMMISSIONER OF C. EX., CALCUTTA-I

INTERSCAPE Versus COMMISSIONER OF C. EX., CALCUTTA-I - 2001 (135) E.L.T. 942 (Tri. - Kolkata) Issues Involved:1. Manufacturer liability of M/s. INTERSCAPE.2. Classification of furniture as handicrafts.3. Marketability and excisability of the furniture items.4. Nature of furniture as movable or immovable property.5. Limitation period for the demand of duty.6. Cum-duty price consideration.7. Inclusion of non-excisable work in the contract value.8. Redemption fine imposed on other appellants.Summary of Judgment:1. Manufacturer Liability of M/s. INTERSCAPE:The main issue was whether M/s. INTERSCAPE could be considered the manufacturer of the furniture items. The appellants argued that the actual manufacturing was done by independent job workers. However, the adjudicating authority and the Tribunal concluded that M/s. INTERSCAPE was the manufacturer as they supervised and controlled the entire manufacturing process, including the procurement of materials and quality control. The Tribunal upheld the Commissioner's findings that M/s. INTERSCAPE was responsible for the manufacturing and thus liable for the excise duty.2. Classification of Furniture as Handicrafts:The appellants claimed that the furniture items should be classified as handicrafts and thus exempt from duty u/s Notification No. 76/86-CE dated 10-2-1986. However, the Tribunal rejected this plea, referencing the Supreme Court's decision in C. C. Ex., New Delhi v. Louis Shoppe, which reversed the Tribunal's earlier decision that wooden furniture was handicrafts.3. Marketability and Excisability of the Furniture Items:The appellants argued that the furniture items were not marketable as they were made to specific customer designs. The Tribunal dismissed this argument, stating that the capability of being marketed is the criterion, and the furniture items were indeed marketable and hence excisable.4. Nature of Furniture as Movable or Immovable Property:The appellants contended that some furniture items became immovable property once affixed to walls or floors. The Tribunal agreed with the Commissioner's detailed findings that the so-called fixed furniture was first completed and then fixed, making them movable and marketable. Thus, they were excisable.5. Limitation Period for the Demand of Duty:The appellants argued that the demand was barred by limitation, citing an industry understanding that furniture was considered handicrafts and exempt from duty. The Tribunal found that the adjudicating authority did not consider the effect of the Supreme Court's decision on this understanding. Therefore, the matter was remanded to the Commissioner for fresh decision on the point of limitation.6. Cum-Duty Price Consideration:The appellants requested that the price charged from customers be treated as cum-duty price. The Tribunal agreed and directed the adjudicating authority to apply the ratio of the Larger Bench decision in V.C. Chakra Buyers v. C. C. Ex. in the de-novo proceedings.7. Inclusion of Non-Excisable Work in the Contract Value:The appellants claimed that the entire contract value, including non-excisable work like civil work, was considered for duty quantification. The Tribunal directed the adjudicating authority to consider this plea in the de-novo proceedings.8. Redemption Fine Imposed on Other Appellants:The other appellants argued that their work contracts included non-furniture items, and the redemption fine was excessively high. The Tribunal remanded the matter for fresh decision, directing the adjudicating authority to consider these grievances.Conclusion:All three appeals were allowed by way of remand. The first appellant's case was remanded on the point of limitation, and the other two appellants' cases were remanded for reconsideration of the redemption fine.