Decided on April 03,1970



RAMAPRASADA RAO, J. - (1.) THE petitioner manufactures articles made out of steel to the specification of the Integral Coach Factory, Madras and the Standard Motor Products of India Limited. THE petitioner's case is that it bends steel plates into angular shapes and supplies such tabular steel frames and chair angles to the Railways and the Motor Company. It is left to the Railway and the automobile company to fix them as they desired with additions such as bottom rails, springs, pillows, rexin, etc. and use them according to their needs as furniture in the railway compartments and automotive cars. On April 17, 1968, the petitioner was orally informed by the Superintendent of Central Excise, Sembiam, MOR Madras-23, that it was liable to declare its stocks as on February 29, 1968 and take out a licence as manufacturer of excisable goods, namely, steel furniture. THE 1st respondent's case is that there was a directive from the Government of India that seats and other steel furnishings do come under Item 40 of the Central Excise Tariff appearing in the First Schedule to the Central Excise and Salt Act, 1944.
(2.) THE petitioner submitted its objections to the letter dated April 27, 1968 to the above effect and stated that the supplies made by it to the Railways and to the Motor company can never be called furniture and that there is no wholesale or retail market for the articles supplied by it and neither the consumer or the trade circles look upon those articles as furniture. Its further contention is that it is not a manufacturer of furniture and that the articles produced are not in any event excisable goods which production would compel it to take out a licence under the provisions of the Act. THE objections were considered by the Assistant Collector of Central Excise, Madras, and finally by a letter dated May 4, 1968, the petitioner was requested again to declare its stock of the articles manufactured by it and take steps to take out a Central Excise licence and to observe all Central Excise formalities. THE case of the respondents is that the Finance Ministry have clarified the issue and they construed that moveable articles which have essential characteristics for being placed on the floor or ground and which are used mainly with the utilitarian purpose to equip dwelling, hotels, ships, aircraft, railway coaches, ambulances, caravan trailers or similar means of transports are covered by item 40 of the First Schedule to the Act. It was made clear that the manufacturers of seats to cars and buses are liable to pay duty on the steel furnishings fitted as to buses etc. On receipt of this final intimation, the petitioner has come to this courtinter aliastating that Item 40 of the tariff will only apply to what are known as steel furniture whether in assembled or unassembled condition and that tabular frame supplied by it are not excisable goods within the meaning of the Act. It contends that there was no legal basis for the demand. Such contention were repeated before us and the learned Counsel for the petitioner added that the petitioner is not obliged to take out a licence, under Section 6 of the Act in the absence of a Notification that the articles manufactured by the petitioner are notified components of steel furniture as provided thereunder.
(3.) THE respondents answering to the contentions would state that the articles in question do retain all the characteristics of steel furniture made partly or wholly of steel and that the manufactured product being designed for use as steel seats in automobiles, railway carriages, came within the above description and added that these articles were subject to an executive exemption under Notification No. 91/68, dated April, 30, 1968 made under Rule 8(1) of the Central Excise Rules. But the respondents' emphatic case is that in any event and notwithstanding the executive exemption the petitioner is obliged to take out a licence under Section 6 read with Section 3 of the Act and the petitioner's case that it is not necessary for it to take out a licence is not well founded. THE respondents' factual contention is that as the products manufactured by the petitioner admittedly form the core to which their buyers only add cushioning materials and the like and as the products are otherwise complete, the products not only satisfy the description of steel furniture, but are excisable materials, for the manufacture of which a licence is statutorily necessary. As the petitioner's operations have undoubtedly brought a new substance into existence, the petitioner cannot be heard to say that it could manufacture the articles without the prescribed licence.;

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