TaxTMI 
TaxTMI 
TaxTMI 
1968 (9) TMI 112
X X X X Extracts X X X X
X X X X Extracts X X X X
....ctober 12, 1959. Under these terms, the Society agreed to carry out weaving work on behalf of the appellant on payment of weaving charges fixed at 19 nP. per yard which included expenses the Society would have to incur in transporting yarn from Bombay and cotton fabrics woven by the Society to Bombay. The appellant was to supply yarn to be delivered at Bombay to the Society and the Society was to made its own arrangement to bring the yarn to its factory at Gandevi. Clause 11 provided that the yarn supplied by the appellant, remaining either in stock or in process or in the form of ready-made pieces would be in the absolute ownership of the appellant and the Society, as the bailee of the yarn, undertook to take such care of it as it would normally take if the yarn belonged to it. The Society also undertook to have the yam insured against fire, theft and all other risks including transit risks and further undertook to reimburse the appellant in case it failed to do so. The terms of the agreement though recorded on October 12, 1959 were to be deemed to be effective as from April 21, 1959 and the agreement was terminable by either party by giving one month's notice. The Society was a ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se (d) of s. 2 of the Act defines "excisable goods" as meaning goods specified in the First Schedule as being subject to a duty of excise. Item 19 in the First Schedule provides for excise duty at different rates depending upon the variety of cotton fabrics. Section 3 which is the charging section, provides for the levy. and collection of duties specified in the First Schedule on all excisable goods which are produced or manufactured in India. Rule 8 authorises the Central Government to exempt any excisable goods from the whole or any part of duty payable on such goods. Clause (1) of rule 9 provides that no excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption, export or manufacture of any other commodity in or outside such place, until the excise duty leviable thereon has been paid at such place and in such manner as is prescribed. Clause (2) of that rule provides that if any excisable goods are, in contravention of sub-rule (1 ), deposited in, or removed from any place specified therein, the producer or manufacturer thereof ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r notification, dated July 31, 1959 was superseded. By this notification the Central Government exempted cotton fabrics produced on power-looms owned by any co-operative society or owned by or allotted to the members of the society from the whole of the duty leviable thereon subject .to the four conditions. therein set out. The notification,dated April 30, 1960 is to the following effect: "In pursuance of sub rule (1 ) of rule 8 of the Central. Excise Rules, 1944, as in force in India and as applied to the State of Pondicherry, and in supersession of the Notification of the Govt. of India, Ministry of Finance (Department of Revenue) No. 74/59 Central Excise, dated the 31st July 1959, the Central Government hereby exempts cotton fabrics produced on powerlooms owned by any cooperative society or owned by or allotted to the members of the society, which is registered or which may be registered on or before the 31st March, 1961 under any law relating to cooperative societies, from the whole of the duty leviable thereon subject to the following conditions :- (a) that every member of the cooperative society who has been a manufacturer of cotton fabrics on powerlooms, has been exempt fr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e conditions specified in the notification. It was contended on behalf of the appellant that under the contract between the appellant and the 'Society there was no relationship of master and servant but. the appellant supplied raw material and the contractor i.e., the Society produced the goods. But even on the assumption that the appellant had manufactured the goods by employing hired labour and was therefore a manufacturer, still the appellant was entitled to exemption from excise duty since the case fell within the language of the two notifications, dated July 31, 1959 and April 30, 1960, and the cotton fabrics. were produced on power-looms owned by the co-operative society and there is nothing in the notifications to suggest that the cotton fabrics should be produced by the Cooperative Society "for itself" and not for a third party before it was entitled to claim exemption from excise duty. It was contended on behalf of the respondent that the object of granting exemption was to encourage the formation of co-operative societies which not only produced cotton fabrics but which also consisted of members, not only owning but having actually operated not more than four power-looms ....