TaxTMI 
TaxTMI 
2002 (11) TMI 717
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.... Ushakiron Movies Ltd. etc. [Priya Foods Division of M/s. Ushodaya Enterprises Ltd., is a unit registered under Central Excise for manufacture of 'Priya' brand pickles etc., and clearing the same on payment of duty]. 2. RFC was set up as a one-stop centre for film-making, spread over a vast area of about 1,000 acres in Village Anajpur, Rangareddy District, Andhra Pradesh. The Film City consists of numerous locations and landscapes which were developed to facilitate and cater to the requirements of out-door and in-door film shooting and production thereof. Necessary equipments, laboratory, Preview theatre and star hotels to provide accommodation to the film-personnel are all made available/located within the RFC. RFC is claimed as a place where a film-maker could walk in with a crew and walk out with a completed film. It is admittedly not a distinct legal entity, as in the case of a firm, company etc. Various group companies and units held by the HUF/RR-HUF have portions within the total area in the RFC. The HUF units situated within the RFC and relevant for the purpose of this case are hereinafter referred to as 'divisions'. Each of these divisions is engaged in the special....
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....ivalent to the duty amount payable prospectively with effect from 28-9-1996 under Section 11AC read with Rules 9(2), 52A and 226 of the Central Excise Rules. (iv) He ordered charging of interest under the provisions of Section 11AB on the total duty payable i.e. Rs. 3,76,43,230/- from the date and same was due till the date of its payment. (v) He ordered confiscation under Rule 173Q(2) of the land, building, plant and machinery etc. and gave an option to redeem the above said items on a fine of Rs. 20 lakhs only by the RR-HUF. (vi) He dropped proposals made in the Show Cause Notice for imposition of penalty under Rule 209A on Shri RR-HUF, Shri A. Ramamohana Rao, Attorney and K. Ravindra Rao, Accounts Manager. Hence, this appeal. 4. The ld. Commissioner vide his impugned order classified under the Headings as follows :- (i) Furniture and similar goods classifiable under Chapter 9403; and (ii) FRP Section classifiable under Chapter 3925; and (in) FRP/POP Statues classifiable under Chapter 9618....
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....ectricity and are from consumption to completion the work is a creation of artist and craft man. Only the operation of blowing unwanted particles of dust is done by employing blowers (like air blowers employed in hair cutting saloons). In other words, the carpentry works, moulding work and the creations of object are done by hand. What may be observed is that the various artists and craftsmen under the leadership of the Art Director work to recreate authentic architectural details harmonising to the place, time and condition of the output and reproduce structures and artistic pieces. The source of the creation is at times pure fantasy, besides from research done from authentic books of art and historical monuments. Plaster of Paris or as the case may be Fibre Glass is used because they are user friendly and enable quick replication of the original. It is like the preference of soap stone to granite in the architectural works of the medieval periods. They are cost effective considering the huge money spent on craftsmen and artists. The materials provide and enable easy holding, moulding and completion with flexibility amenable to quality finishing to required texture and colou....
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.... (f) Once this get dried up fibre glass mat with chopped mat are put into it and the function of the chopped mat is to fill up all possible tiny recesses that might exist in the surface. Depending upon the size of the piece to be cast 5 to 7 layers of mat are applied with resin. Once the FRP mould is formed, the same is removed from the cast and the same is given final touches. Defects if any are removed. (g) When it comes to the fine finishing operations these are done at two stages. Firstly at the time of finishing in clay design and the clay models and finally in the fibre glass moulds. (h) Clay designs are made in three ways, small size designs are made on ply wood. Medium, Designs are made on wooden armature. Large designs are made on wooden platform. Fingers are the main tools. All the delicate designs based on authentic books of art, album of art or from pure imagination are brought into relief through the deft use of fingers. So in all sense the design works starts in the same platform as any handicraft work does. The clay work is then smoothened and is brought into perf....
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.... not the paper or canvas on which it is made. 5. What is valued in a film set and settings is the conception and the creation irrespective of the materials employed. It is FRP or PoP today. It could be something else tomorrow. It does not really matter as long as the conceived items is a visual beauty and there is no controversy on this aspect. Prior to FRP or PoP, articles employed were wood and canvas. The present day choreographers are trying to employ rubberized materials as a substitute to plastic or FRP. The creation therefore cannot be called as wooden articles in the past, plastic articles in the present and articles of rubber in future. 6. These works of art do not have any functional utility. For example, a piano may look like a piano. But that piano cannot be as a playing instrument. Sometimes, these items are designed to given a opposite effect. For example, a bed if a commodian sits will break. These are used in the make believe world of film shooting. They only appear as a particular item but are not understood as such in the market. Even if they are brought to the market, ....
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....he conventional definition of manufacture, and in the absence of any deemed definition by the Parliament, the artistic creations in Maya cannot be called as a manufacturing activity. In short a creative work of art arising out of one's own imagination cannot be construed as an industrial activity of manufacture. It is for this reason that drawings, sculpture, film sets and similar such items do not figure in the Central Excise Tariff Act, 1985 as these are not products for trade and consumption. Further, the items under question are not marketable. Marketability is sine qua non for imposition of Central Excise Duties. These goods are not bought and sold as articles of plastics or as builders ware. Market or trade does not recognize this product as articles of plastics or builders ware. A film set or settings is created essentially for a make belief situation. They do not have any utility value as the items referred to in Chapter 11 to Chapter 39 or for goods falling under Entry 39.25 of the Central Excise Tariff Act, 1985. In short, these are not goods known to the market for the purpose or utility ascribed under entry 39.25 and these are not traded or marketed as goods or ar....
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.... creation of temple or mosque or a statues is not recognised by its base material as an article of plastic or as an article of PoP. (f) Revenue has not let in any evidence in any form to show that the world does not view these articles for aesthetic beauty but view it as mere articles of trade based on the base materials as articles of plastic or articles of PoP, etc. We reiterate no evidence has been cited or referred. No statement recorded. No enquiries made and no proof furnished. (g) On the other hand appellants have submitted evidence by showing that the entire location has been declared as a tourist centre vide G.O. Ms No. 31 dated 13-4-94 by the Government of Andhra Pradesh. Para 2 of the Government Order reiterate keeping the national action plan for tourism formulated by the Government of India, the State Government after careful consideration hereby notifies the places specified in the Annexure-I to this order as special tourist centres. When the place has been declared as a tourist centre and when more than 2000 tourist visit the place every day the inference is natural that the visitors and tourist ....
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....v. Fibrotec India, [1997 (90) E.L.T. 489 (T)] wherein the Tribunal was pleased to hold that FRP items which are commercially known in the market as FRP roofings will be covered by Chapter Note 11 to Chapter 39.35. The Tribunal also confirmed the evidence produced in the form of literature, invoices and documents to prove that the end use of the goods are only as builders ware. Moulds : It is the revenue's case moulds would fall under Chapter 84.80 and therefore they are liable to duty. It is also the revenue's case that moulds have been captively employed in the processing of film set and settings and since duty is imposed on the final products moulds are exempt from duty vide captive consumption notification No. 67/95 dated 16-3-95. It is our respectful submission that moulds are not liable to central excise duty and therefore any reference or extension of captive consumption benefit is either not relevant or referred out of context. What applies to the object created by employing PoP moulds or fibre glass moulds should also apply to the moulds themselves which are again only intermediate consumption of the artists and craftsmen. These are again prepared through hands and....
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.... used for shop window would fall under 9618. These are all machine made items prepared out of metal moulds and are being traded as articles of merchandise. "Mannequins" which can be produced through machines cannot be compared to a statue created initially through an imagination in the minds and translated by skilled craftsmen. A statue is a work of art whereas a "Mannequins" is a piece for commercial display. In any view, these items are never employed at any stage for shop window pressing. These are used in various locations for film shooting as part of film city and therefore they do not merit classification under Chapter 9618. Notification No. 76/86 dated 10-2-86 as "Handicrafts" : Assuming but not admitting, should the Revenue still hold the view that the activity might amount to manufacture, the goods in question are not liable to duty since these are exempted as handicraft under Notification No. 76/86 dated 10-2-1986. The Supreme Court had an occasion to examine the said notification in the case of Collector of Central Excise, New Delhi v. Louis Shoppe, [1996 (83) E.L.T. 13 (S.C.)]. Wherein the Apex Court had laid down the following tests for an item to classify as han....
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.... end, since the demand proposed in the show cause is on the FRP sections made by Maya and not on the structures made out of them by the receiver units. 3. The said FRP sections were used to built various interchangeable structures like temples, etc., classification of the said FRP articles under Chapter 39.25 as builders ware of plastic would be the correct one. 4. They are manufactured for repeated commercial use and not as an expression of one's artistic talents and therefore not eligible for exemption as handicraft. Any engraving or inlay work on them cannot be considered to be lending them any artistic improvement with visual appeal. Comments : 1. Having held that the entire creation gets completed in the hands of the appellants (Maya), there is a contradiction in the later paragraph by observing that temples or mosque emerge in the hands of the receiver units. 2. The suggestion at Para 12.1 that appellants have submitted that what is cleared are only FRP articles in unfinished form and only temple....
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....T. 80 (T)] wherein the Tribunal vide para 6 had held that the plea that classification is not dependent upon end use of an article as held by the Supreme Court in the case of Dunlop India. The proposition would hold good only as long as the end use is not specifically mentioned in the Tariff entry itself and if the tariff entry contemplates an end use then use of an article for such an end use is relevant for classifying the said item under the said entry. Supreme Court in the case of Collector of Customs v. Kumudan Publications (P) Limited [1997 (96) E.L.T. 226 (S.C.)] has also held that it may not be entirely correct to say that in a given case end use or function of the goods is relevant on the question of classification. 4. The trade and market do not treat statues as similar to tailors, dummies and other lay figures. 5. Items falling under 96.18 are not creations of art based on any authentic historic depiction. None of the statues are used for the purpose stated in sub-heading 96.18. Usage in shop window dressing is a sine qua non for entry into the heading. The items under question are ....
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....pellants. Proceedings if any therefore ought to have been initiated either against the user division or against the contractors and not the appellants. (b) The show cause notice itself admits that these items are made by contractors/carpenters on job work basis and therefore demand against the appellants is misplaced. (c) Harmony on its own does not fabricate or produce goods. Independent contractors engaging their own labour force, tools and tackles produce the goods. Goods are not meant for harmony and salaries are not paid by harmony. Raw materials such as wood, paints, lining material, etc., are not supplied by harmony and these are provided directly to the contractors by the user divisions. The Witnesses during cross examination submitted the following : (1) They are not dedicated staffs or workers or hired labourers of the appellants. They carry out works in various places including in RFC. (2) Each of the contractor has about 15 to 20 carpenters and the activity supervised by the contractor and the carpenters report only to the contract....
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....ndent operators and not hired labourers are the manufacturers of goods and duty if any is payable only by them and proceedings if any ought to have been initiated only against them. It is the independent contractors who manufacture and clear the goods to the user division. Therefore in no way RFC or its constituted user decision acquire the status of a manufacturer in fabrication of these furniture. The independent contractors are supplied with wood/raw material in cut and planed condition and it is the independent job workers who convert the raw materials into finished goods viz furniture and other wood works. It is a settled law that one who produces the goods is the manufacturer. Even though the adjudicating authority has referred to the cross examination proceedings (Para 5.2 to 6.5 - Pages 8 & 9 of the order) the aspects referred above have not been denied or controverted in the order. Once the contractors are held to be independent manufacturers it would be erroneous to initiate the proceedings or confirm the duty demand against Harmony. It is for this reason appellants submit that a conclusion that appellants are manufacturers and not the contractors is unsustainable i....
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....al Advisor. The Tribunal in the case of Coimbatore Aero Based Control Systems (P) Limited v. Commissioner of Central Excise, Coimbatore [2000 (116) E.L.T. 193 (T)] has held that a technical advisor cannot be held to be a manufacturer when it is clearly established the manufacturing activity carried out by the third parties themselves. (b) In the case of Binny Limited (Engineering Works) v. Collector of Central Excise, Meerut [1998 (99) E.L.T. 681 (T)] the Tribunal was pleased to hold that a hired labour is one who hires himself out of work for and under the control of another for wages. But because he makes goods for another customer for a consideration he cannot be said to have hired himself out to another person for manufacture of goods or that the customer for which he manufacture goods. To constitute hired labour, relationship of master and servant between those hired and hiring is a must, which implies active control and supervision of those hired Evidence on record shows that the contractors are independent and work on their own will with no obligation to surrender their independence to Harmony. (c) The T....
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.... were also figuring in the books of Harmony and there are no corresponding entries in Parade and therefore works had been carried out only by Harmony. In response to this letter Parade had clarified vide letter dated 19-6-1999 along with supporting evidence and details. The show cause notice has conveniently ignored this aspect and has burdened 'Harmony' with the alleged liability. In fact neither 'Harmony' nor 'Parade' are manufacturers. As stated earlier, it is the independent contractors who are the real manufacturers. The entire correspondence between the department and Parade in this regard is enclosed as an annexure to this reply and the same may therefore be read as part and parcel of this reply. In the circumstances the clearances relating to Parade should also be excluded. Notwithstanding the above and without prejudice the appellants submit that should demand made against Harmony the whole demand has to be reworked taking into account the exemption towards handicrafts of FRP items, statues, furniture items set properties and the aggregate clearances also have to be worked out in terms of the SSI notification for each financial year. It is also submitted that if duty is....
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.... (iv) Reference to Entry 9403 read with the Explanatory Notes to HSN including the exclusion clauses goes to show that items which do not have the character of furniture would not fall under the said entry. Limitation The creation of film set and settings has been in vogue in this country since the inception of film industry which is almost one century old. Similar activities are carried out for shooting Maga Hit Movies, T.V. serials, tele films, soap operas, and these creations have not been held as excisable by any of the Divisions or Ranges. The activity of motion picture making and as a corollary making of artistic sets are well known since 1940 in India. It may also be appropriate to indicate apart from these situations and creations being found and looked in different cities, film cities, amusement parks, these are also created for special occasions like Independence Day and Republic Day Parades, where authentic and highly artistic structures and creations are made as visual appearance showing to the people the history and development of the country. In the history of Central Excise duties have never been imposed on these institutions on these....
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.... is unsustainable. The Supreme Court in the case of Pushpam Pharmaceuticals Company v. Collector of Central Excise, Bombay [1995 (78) E.L.T. 401 (S.C.)] had held that no rule could be pointed out requiring a manufacturer to disclose the turnover of exempted goods. Even assuming it was the appellant could not be held guilty for suppression when the law itself was not certain. Proceedings therefore under the extended period of limitation should fail. In this connection appellants refer to the decision of the Tribunal in the case of Peejay Apparels (P) Limited v. Commissioner of Central Excise, Chandigarh [2001 (135) E.L.T. 842 (T)] wherein the Tribunal was pleased to hold that in view of the long standing practice that no duty was payable there was a bona fide belief and therefore appellants cannot be held to have suppressed or mis-stated facts. When proceedings are neither maintainable on merits nor on limitation question of imposition of penalty does not arise. In this connection attention is drawn to the decision of the Larger Bench in the case of Hindustan Construction Co. Limited v. Collector of Central Excise, Chandigarh [1997 (89) E.L.T. 123 (T)] wherein the Tribunal was pl....
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.... the details regarding the various furniture it would be appropriate to mention that both the types of furniture mentioned above are exclusively designed and hand crafted. These furniture are not mass-produced and are not meant for commercial sales or usage. The user agencies will indent for their furniture requirement through a facilitating agency called Harmony, which is also unit of the HUF units within the Ramoji Film City. Harmony is a place where the independent contractors manufacture various types of furniture as contracted with Harmony. The hotels within the Ramoji Film City are not regular hotels for Tourism and Guests. These hotels are designed and constructed for the lodging requirement of the film personalities and crew. While doing so, they were also meant to be utilized as sets for any particular film requirement. Several examples of films being shot in these hotels can be cited. Few examples of these films are as follows : (a) Bademiya Chotemiya - Hindi Movie (b) Maanannaku Pelli - Telugu Movie (c) Nee Kidiaaitall Padum - Tamil Movie These hotels also built with certain "Themes" in mind and have Theme Suites : Examples....
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.... as per the set requirements. (iii) These furniture are also designed to cater for the specific stunt requirement of the various scenes in films. Very often we see furniture is being broken on the heads of various artists while fighting etc. These furniture are all specialized furniture which have been made with light wood and which cannot be utilized for the normal usage purposes. Similarly there are various other wood works and furniture, which have very specialized usage in the film sets only and in the normal environment of usage they have not operational utility. Parade is a sort of prop-shop or rental agency for the set props, which exclusively caters for the film shooting and set requirements within the Ramoji Film City, there is no furniture artifact, which is taken into film sets. Therefore, both the type of furnitures i.e. one supplied to the hotels and the one sent to prop-shop are not furniture, as we understand in common parlance and therefore they are not excisable. (c) The ld. DR has submitted : - (i) The show-cause notice deals with the nature of the furniture in paragraph 10.1, with spe....
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....only labour charges. (d) Para 9 to 11 of the Show Cause Notice relied upon by the ld. DR read as under :- "9. MANUFACTURE OF FURNITURE ARTICLES : (1) Harmony was established as the Furniture-making unit for the Divisions in RFC. As explained by Shri A. Ramamohana Rao, M.D and Attorney, the starting of Harmony (and Maya) was intended to enable proper supervision and control, while making items to their satisfaction, which were required for the various purpose in Film City. Shri Sudhakarbabu, Additional Manager, DHL also stated that for most of the requirement of the Furniture and fixtures for the hotels in RFC (viz., Sitara, Tara, Sahara and Samrat), DHL purchased the Wood, hardware., which were given to their group-unit Harmony, which has got the expertise, facilities and machinery for making required items. Shri Ravindra Rao deposed that Harmony is a facility Centre with its own Shed, power-connection and machines to make Furniture and other articles of wood. (2) Shri Pratap Singh, with experience in the field of Furniture-making (and earlier Shri Ahmed), was employed by Harmony as a Consultan....
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....ONY; that once the carpentry work is completed, the goods are painted/polished in Painting/Polishing workshop (by other personnel i.e. painters, polishers and their assistants) and the items are dispatched only after completion of the carpentry and painting work. (6) The carpenters and painters were paid labour charges by Harmony, on a piece-rate basis (which included the wages of their helpers/assistants). For payment of the Labour Charges, Harmony's Consultant (Shri Pratap Singh) prepared Estimates, which were submitted to the M.D. for approval. As seen from the documents titled as 'Cost Breakup/ Estimate for furniture cost', the carpentry and painting charges were approved by Shri Ramamohana Rao, sometimes after reducing the amounts originally mentioned. The labour charges (rates) were accordingly paid to the carpenters and painters etc, as per the approval given by Shri Ram Mohan Rao. The above method of approval and reduction of the labour-charges was also identified and explained by Shri Ramalingeshwara Rao, Executive-Accounts, Harmony. Shri Ravindra Rao stated that the M.D. approves the rates as per prevailing market rates and as advise....
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....t of Rs. 87,06,489/- billed by HARMONY - termed as 'Room, Restaurant, Lobby and other Furniture labour charges debited by Harmony (vide Bill Nos. 301 and 303 dated 31-3-98); Rs. 1,74,310/- was deducted as "TDS deducted from Harmony on Furniture labour bills and credited to "TDS on Contractor A/C". All the other companies similarly deducted 'TDS on contract' from the amounts charged by Harmony. [Copies of the relevant documents pertaining to these were submitted by Shri Ravindra Rao, vide his letter dated 3-6-99 (Annexure-A-5(32)]. (11) In their annual Trial Balances (from 1994-95 onwards), Harmony accounted the details of various Furniture items being manufactured under the head of account 'Job works', indicated for each Division separately. Similarly, under the account-head of 'Furniture under preparation', details of various furniture items being manufactured were also shown separately. In the trial balances of the companies like DHL (including the individual accounts of the Hotels - Tara, Sitara etc) under the account-head of 'Furniture under Preparation' (or as Work-in-Progress) details of the Furniture items being manufactured were similarly shown. S....
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....indents for raw-materials, nothings of Shri Pratap Singh allotting the work to carpenters etc., acknowledgements given by the Divisions for receipt of Furniture items/ work done etc., were found available in the files recovered vide Sl. Nos. A-8, B-2, B-17 to B-20 ANNEXURE-C-2-6). (15) Though Shri Ravindra Rao was requisitioned to produce all the documents pertaining to the activities of Harmony, such as indents/ work-orders placed by Divisions on Harmony, raw-material and finished Furniture accounts, dispatch documents etc., he produced only the 2 Delivery Challan books, mentioned above (apart from other tabulated statements showing the details of Furniture items). Thus, it was evident that apart from the documents and records mentioned above (and those found among the recovered records), no other account of record was maintained by Harmony. 10. MANUFACTURE, CLASSIFICATION AND DUTIABILITY : 10.1 The processes of cutting, planning, sizing and rounding etc., carried out on wood as per designs and specific dimensions and further assembling of the sized pieces, results in the emergence of distinct furniture items with a separate commercial identit....
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.... position and considering the Apex Court's ruling, the wooden Furniture items produced by Harmony, are not handicrafts, eligible for exemption from Excise Duty). 11. MANUFACTURER 11.1 From the details mentioned above, it is evident that HARMONY has manufactured excisable and dutiable Furniture items. Vide letter dated 26-3-99, submitted by Shri Ravindra Rao, Accounts Manager (ANNEXURE-A-5-9), it was claimed that "no manufacturing activity is taken by Harmony. HARMONY is a facility centre only possessing necessary expertise and the above said manufacturing activity is offloaded to independent sub-contractors; that HARMONY and identified more than 60 sub-contractors - who undertake job works relating to furniture/partitions on job-charge basis and further they are independent manufacturers of furniture/partitions." S/Shri Ravindra Rao and NLN Das, Sr. Law Officer put forth similar versions, in the course of their statements given under Section 14 of the Act. 11.2 Under Section 2(f) of the Central Excise Act, 1944, 'manufacturer' includes not only a person who employs hired labour in the production or manufacture of excisable goods, bu....
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....ng more, (vi) That the labour-charges paid to them are as per the approval of the M.D. only, (vii) That they work only as per the instructions given by Shri Pratap Singh and none else and that all the other carpenters, painters work under similar terms/conditions, and (viii) That even repair works etc., are also allotted by Shri Pratap Singh only, and that whoever (in RFC), requires work, the same is informed to Shri Pratap Singh only. 11.5 In their statements given under Section 13, S/Shri Ramamohana Rao and Shri Ravindra Rao also confirmed the position that the rates of labour charges, are as approved by Shri Ramamohana Rao only. Shri Ramamohana Rao deposed that the wages are paid as per his approval only and that at times, he has received objections (on reducing the rates). Though Shri Pratap Singh initially (on the date of search), stated that the rates are as orally agreed upon; the fact that the labour charges are paid only as per the M.Ds approval was found evident from the documents i.e. Estimates and also from the statements of the above persons. Further, this position was also clearly states by the carpenters, painters and line....
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....f Harmony's labour bills pertaining to the repairs done by these carpenters etc., is enclosed as ANNEXURE-C-1-9. The labour charges for these works were decided by 'HARMONY'S in-charge' (Shri Pratap Singh), as deposed by Shri Ramalingeshwara Rao of HARMONY. The above was also admitted by the carpenters and painter etc, who deposed that whatever work is there in Film City, the same is given to them only by Shri Pratap Singh. The letters/correspondence contained in Files B-18, B-19 (Annexure-C-26) also depicted the fact that these carpenters, painters have attended to various miscellaneous works, through Harmony only. (v) All the overheads pertaining to the manufacturing activity i.e., expenditure towards power, rent, use of machines and also elements like depreciation, interest on investment were incurred by HARMONY and billed, on the Divisions, along with the margin i.e. markup towards profit, which thus/flowed directly to them. The carpenters, painters etc., were not involved in any manner, either for being charges for the overheads etc., nor for being given a share of manufacturing profit, the only remuneration received by them b....
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....s appear to be merely the labour-providers for Harmony. Shri Ramamohana Rao, Attorney of Harmony, when questioned as to why the carpenters, painters etc, were termed as contractors, categorically stated that 'carpenters and painters work under the contractor, sometimes the contractor himself does the painting work etc.) Thus, it emerges that the carpenters and painters, employed by Harmony are termed as 'contractors, in terms of the labour provided by them (along with their assistants and helpers) and they are not independent 'sub-contractors' for the Furniture making activity as a whole. (viii) Even in their own correspondence and letters, the personnel in RFC have clearly mentioned that the manufacturing activity is done by Harmony. The Divisions referred to Harmony as 'Furniture Unit', Carpentry Shed etc. and accordingly indented Harmony for supply of the material. Thus, it appears that even within their own internal annals, the Divisions in RFC have dealt with Harmony as the manufacturer/manufacturing unit. This is also evident from the letters mentioned vide paras 9.1 to 9.5 supra. For example, vide Inter-Office memo dated 16-6-98 (ANNEXURE-C-1-11), ....
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....e of this position, Harmony appears to be the 'manufacturer', as defined, under Section 2(f) of the Central Excise Act, 1944." (e) from the submissions, it is apparent that there is no conflict as regards the processes undertaken at MAYA and HARMONY divisions. The dispute is regarding the classification of the entities emerging at MAYA and HARMONY and if exigible who is the manufacturer and whether based on the case law relied upon, the demands other liabilities could be arrived at. (f) From the Book "What an Art Director Does - An Introduction to Motion Picture Production Design" by Ward Preston published by Silman-James Press, Los Angeles, (ISBN : 1-879505-18-5); the Chapter on Set Construction, as extracted herein below would be very relevant to arrive at and indicate of what a FILM CITY and its division are engaged in : "Set construction on a soundstage is the meat and potatoes of art direction. The film industry's years of experience with this system has resulted in the closest thing that Hollywood has to an assembly line operation. When compared with the confusion and frustration of building sets on location in a warehouse with semi-trained personnel, worki....
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....le calling it the "plaster shop." If the staff shop is given a prototype model, they can cast duplicates of almost anything. And, if you don't have a prototype, they will bring in a modeler or sculptor to make one. The earliest of the backlot streets used staff "skins" to imitate the exterior surfaces of brick or stone buildings. Because of the weight of plaster, these skins today are molded in fiberglass, foam rubber, or vacuum-formed plastic. The development of resins for castings has also put the staff shop in the foundry business. Hardware door escutcheons, raised letters, and ornamental hinges are common requests. Now is probably the time to mention the Hardware Department. Pilferage on motion-picture sets has not usually been a problem. However, if any single category of items can be regarded as in jeopardy, it's the hardware. For some reason, these items are considered fair game to those of a felonious nature. Of course, there'll be some surprised vandals when the brass paint comes off those plastic resin key plates. It's a blessing that the imitations are available. Gathering enough matching hardware to complete a large set would be next to impossible without them. Th....
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....draper department is the Upholstery Shop. Whether its an occasional pillow or the emperor's sedan chair, this shop has probably already done a dozen similar projects. Before committing to an entire seating group in an exciting material, it will pay to have a short meeting with the costume designer. It would be a shame to see our actress disappear in the inadvertent camouflage of similar colors. Prior to getting that new upholstery, the decorator can check the piece into the Furniture Refinishing Shop. Sometimes this is just another function of the paint shop or it can be a separate shop. In any case, it's unlike any commercial shop in that they also have perfected the art of aging and weathering pieces as the story may dictate. The arts of aging, texturing, and creating faux surfaces make the studio Paint Shop the creative centre of the back lot. When showing my concern over the way a wood replica of an iron fence was being assembled, I was reminded of the art director's first commandment: All the camera sees is the last coat of paint. With that in mind, the importance of this critical craft comes into focus. Painters actually put in very little shop time. The spray booth is ....
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.... difficult time corrupting his work enough to make it look amateurish. Do these signs yourself or turn them over to a production assistant. Once you are familiar with all the backup a studio facility has to offer, it's time to start work on stage. A Soundstage designed for set construction will have many advantages over a converted warehouse, i.e., ample electricity to operate power tools, compressed-air outlets for sprayers and tools, running water and sinks for paint crews, level wood floors suitable for nailing, removable sections of flooring over pits into which staircases can descend, an accessible, reinforced overhead grid from which to hang light scaffolding, heating and air conditioning units, and, of course, proper sound insulation." (g) From the extracts at (f) herein above, it would appear at RFC while the activity at unit 'HARMONY' is what is named as 'Mill' in the extract above that activity at 'MAYA', is combined activity of 'Staff Shop', 'Metal Shop', and the special effects department, while at Parade it is the 'Prop Shop'. A reading of this book indicates that 'Staff Shop' i.e, MAYA in this case, is the place where Plastor of Paris material with fibre bi....
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....ption and imagination with practical, technical skills. Sculpture in the round demands a coherent combination of many different design elements, as it will be seen from several different viewpoints, and ideally each view should be equally worked out. Relief sculpture presents quite different design problems, since a complicated series of actual spatial relationships may have to be indicated within a relatively shallow depth of material. The particular challenges to a sculptor's capabilities may be overcome by learning or by instinct, but, inevitably, it is only in practice, not in theory, that the solutions are found. The three basic methods of creating sculpture with raw materials are carving, modeling and construction. Carving and modeling are the oldest methods, and the basis of sculptural traditions, whereas construction has only been fully exploited and accepted in the twentieth century. Casting is a fourth basic technique, but this is a process of reproduction, not of original shaping." (Emphasis Supplied) And, thereafter this book lists out various nuances and forms of material like Cla....
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.... for what the Camera sees and in reality they are not a Building, as understood by the Builders and others in the Building Industry. Therefore, parts or full, of whatever that goes into such make believe building of sets, cannot be, by any stretch or common prudence or understanding, be taken to be 'builders hardware' to get classified under Chapter 3925.99 as arrived at by the ld. Commissioner. The 'builders ware' under Chapter 39, cover a particular type and quality and function goods marketable and dealt with in the market as 'Builders Ware'. As found herein above, the goods, under dispute, in this case did not qualify the marketing test of builder wares. A part or full model copy of a building, cannot be building or builders wares. In any case, no evidence has been brought forth in the material on record by the ld. Commissioner as to how the marketing test as 'Builders Ware' is satisfied to charge duty under heading 3929.99. The classification arrived at by the Commissioner cannot be upheld. (j) As regards the classification of other entities of the 'Staff Shop' i.e., MAYA, in this case, being held as 'Tailors Dummies' falling under Tariff item No. 9618.00, the same can....
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....p; Items like, various notice boards to chairs, Old Shift Wood Handle Chairs, Sofas, Beds, Cupboards, Nameplates, Keyboards etc. The entities could be broadly classified into items, which are commonly understood as articles of furniture and supplied to hotels. (ii) Items which are parts of furniture and supplied to hotels for in situ creation of hotel room/lobby-interior furnishing/ furniture. (iii) Items which are supplied to the various studio sets as props in original or after repairs, painting and refurnishing. (l) Before proceeding to examine the classification of these items, said to be furniture under Chapter 94.03 of Central Excise Tariff as arrived at by the ld. Commissioner, it is necessary to consider the nature, purposes and use of the items which emerge and go to embellish the studio sets, as props therein. Examining the same, it is found from the Book, Designing Dreams Modern architectures the movies by Donald Albrect, published by Thames and Hudson, 1987 and printed at Harper and Row Press, New York, stipulates at page xii in Chapter 'Introduction' : - ....
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....th a curious challenge. While the kitchen involved the active functions of cooking and cleaning, both of which were acceptable to the film censor, the sleeping and sexual functions of the bedroom were either static or taboo. The designer was therefore forced to transform the typical functions of the bedroom to allow a heroine to be engaged in an acceptable activity while at the same time expressing her liberated sexuality obliquely. One way of accomplishing the former was to raise the double bed itself on a platform or to position it within a curtained niche. This tactic acknowledged the necessary presence of this piece of furniture in the boudoir, but prevented it from being approached onscreen in the company of men. Another stratagem was to exaggerate both the scale and the position of dressing and makeup tables, stressing the grooming function of the room. Portraying the eroticism of the "new woman" was less a problem. A heroine's sexual allure could be subtly suggested by placing her on a daybed - A popular item of decor of the period-chaise longue, or sofa, furniture that allowed her to assume a reclining position for reading, telephoning, smoking, or just lounging in elega....
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....n. In fact, this furniture is not required to be of good quality durable wood. The last coat of paint is only what is seen by the Camera. It is given in a manner required to achieve the desired effect for films. Therefore, these Decorative pieces are being incorrectly termed as furniture pieces in the present case. At the most, they could be termed as Furniture to Conjure and designed to that effect or to decorate the set to enthrall and captivate the audience. They should be, if at all called, as furniture, could be termed as "Conjurers Furniture Pieces or Decorations". Such 'furniture pieces' are found to be excluded from being classified under Chapter 94 by Chapter Note 1(k) of Chapter Note 94 of Central Excise Tariff which reads as under : - "1(k) Toy Furniture or toy lamps or lighting fittings (heading No. 95.03), billiard tables and other furniture specially constructed for games (heading No. 95.04), "FURNITURE FOR CONJURING TRICKS OR DECORA-0TIONS" (other than electric garlands) such as Chinese lanterns (heading No. 95.05)." Therefore, supplies made from HARMONY to studio sets in original or after refurnishing at PARADE cannot be classified under heading 9403 as arrive....
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....for the purposes of granting benefit of 'nil' rate of duty under Notification No. 76/86 dated 10-2-86 and detailed reasoning arrived at, as to why it has not been considered as handicraft in terms of the Hon'ble Supreme Court's decision on this subject in the case of Louis Phillipe and facts. (q) Such items as are identified as dutiable furniture under 9403 and parts thereof as herein above, thereafter have to be considered for their eligibility for Small Scale Exemption Notification on Annual Turnover Basis for various years. The benefit of Sri Chakra Tyres decision [1999 (108) E.L.T. 361] has to be granted for 'Valuation' for Exemption as well as for the purposes of levy of duty, if any, if the exemption limits are being crossed. Since this would require extensive and intensive re-determination of facts, we would set aside the order and remand the matter back for re-determination of the quantum of Furniture which could be classified under Chapter 9403.00 and duty if any, therefore, be worked out as above. (r) Since the matter is being remanded back to re-determine the classification of such furniture as supplied to Hotel, Cafeteria/ Offices, we leave the question ....