M/S
Punjab Footwear Limited, Jalandhar Vs. Collector of Central Excise, Chandigarh [1994] INSC 549 (26 October 1994)
Singh
N.P. (J) Singh N.P. (J) Sahai, R.M. (J) N.P. Singh, J.:
CITATION:
1995 SCC (1) 55 JT 1995 (1) 129 1994 SCALE (4)734
ACT:
HEAD NOTE:
1. M/s
Punjab Footwear Limited, the appellant, have been manufacturing footwears. It
appears that the process of manufacturing of footwears is partly done by the
appellant and partly by M/s Stepwell Industries Limited on behalf of the
appellant on the basis of an agreement entered into between the appellant and
the said M/ s Stepwell Industries Limited.
2. In
respect of the claim for benefit under Notification No. 88 of 1977 CE dated
9.5.1977, the Collector of Central Excise, Chandigarh by his order dated
21.8.1980 held that the number of workmen directly employed by the appellant as
well as the number of workmen employed by M/s Stepwell Industries Limited are
to be counted and as the number of workmen in both the factories exceeded 49,
the appellant was not entitled to the benefit of aforesaid Notification.
3. The
Customs, Excise & Gold (Control) Appellate Tribunal (hereinafter referred
to as 'the Tribunal') affirmed the aforesaid finding of the Collector saying
that for purpose of granting or refusing the benefit of the Notification
aforesaid the number of workers working in the factory of the appellant as well
as the factory of M/s Stepwell Industries have to be taken into consideration
and as the number of workmen exceeded 49, the appellant was not entitled to the
benefit of the aforesaid Notification. On that finding, the appeal of the
appellant was dismissed. The relevant part of Notification No.88 of 1977 read
as follows:
"In
exercise of the powers conferred by sub - rule(l) of Rule 8 of the Central
Excise Rules 1944, and in supersession of the notification of the Government of
India in the Department of Revenue and Banking No. 103/76 - Central Excise,
dated the 16th of March, 1976 the Central Government hereby exempts footwears
falling under sub -item (1) of Item No.36 of the first schedule of the Central
Excises and Salt Act, 1944 (1 of 1944), from the whole of the duty of excise leviable
thereon:
Provided
that:
(1)
Such footwear is produced by or on behalf of a manufacturer in one or more
factories, including the precincts thereof, wherein not more than 49 workers
are working, on any day of the preceding 12 months, or (ii) the total
equivalent of power used in the manufacture of such foot wears by or on behalf
of a manufacturer in one or more factories does not exceed 2 Horse Power."
4. The
learned counsel appearing for the appellant urged that in view of proviso (i),
the appellant was entitled to the ben- 131 efit of Notification in question
because the footwears were being produced by or on behalf of the appellant
which shall be deemed to be manufacturer in one or more factories. It was
pointed out that M/s Stepwell Industries shall not be deemed to be a factory
belonging to the appellant, as such the Workmen of M/s Stepwell Industries
should not be counted for purposes of granting or refusing benefit of the
Notification. It was also submitted that the expression 'such foot wears'
occurring in proviso (i) has to be read with reference to the foot wears
manufactured directly by the appellant in their own factory and the number of
workmen working in the factory of the appellant shall be the determining
factor.
5.
Before this aspect could be examined in detail, the learned counsel appearing
for the respondent, drew our attention to the agreement dated 1.8.1977 between
the appellant and M/s Stepwell Industries Limited. It was pointed out that in
terms of the said agreement, M/s Stepwell Industries Limited was working on the
machines installed within the premises of the appellant, for purpose of the part
of the manufacture of footwears in respect of which contract had been given to
said M/ s Stepwell Industries Limited. Not only the said M/s Stepwell
Industries were to use the machines of the appellant, but they were also
entitled to use the electricity from the meter of the appellant and had to pay
the charges for the same. The agreement says that the possession of the
premises shall remain with the appellant, but M/s stepwell Industries shall
have licence of entering the premises to work on the machines'. It further says
that M/s Stepwell Industries 'shall use the electricity from the meter' of the
appellant and 'shall pay the electricity used by them'. It was also stipulated
that 'the maintenance of the machinery and its operation would be the responsibility'
of M/s Stepwell Industries.
6. In
view of the aforesaid terms of the agreement, the workmen of M/s Stepwell had
to work within the premises of the factory of the appellant. In this
background, can it be said that the workmen of M/s Stepwell Industries were not
working within the precincts of the factory of the appellant? As such while
calculating the number of workers, the workers of M/s Stepwell Industries have
to be taken into account. There is no dispute that if the workers of M/s Stepwell
Industries are taken as working within the precincts of the appellant, then the
number of workers was in excess of 49, mentioned in proviso (i) of the
Notification aforesaid.. The benefit of the Notification in view of proviso (i)
can be extended only to such manufacturers in whose factory including the
precincts there of, not more than 49 workers arc working on any day of the
preceding 12 months. As within the precincts of the factory more than 49
workers were working including the workers of M/s Stepwell Industries, the
appellant shall not be entitled to the benefit of the Notification.
7.
According to us, the Collector as well as the Tribunal have rightly come to the
conclusion that the appellant is not entitled to the benefit of notification in
question.
Accordingly
this appeal fails and is dismissed. However, there will be no order as to
costs.
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