1. In this revision under Section 36 of the Central Excises and Salt Act, 1944 (as it stood at the relevant time), hereinafter referred to as the Act, transferred to the Tribunal and heard by us as if it were an appeal pursuant to Section 35 of the Act, it would appear that- (a) the Appellant entered into a composite contract with the State of Orissa for fabrication, supply and erection of radial gates for which a lump-sum payment was to be made in terms of the contract ; the State of Orissa was to supply the Appellant, bars, plates, slabs etc. and radial gates were to be manufactured and erected at the site ; the contract, however, did not quantify the consideration separately for fabrication, supply and erection ; (b) the Appellant had failed to obtain a licence under Sec. 6 of the Act read with Rule 174 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules), notwithstanding that, admittedly, they were fabricating the aforesaid gates without the aid of power employing more than 49 workers ; (c) a notice dated 12-4-1977 was accordingly issued to the Appellant requiring the Appellant to show cause- (ii) duty amounting to Rs. 20,860/- due on the goods should not be demanded under Rule 173-Q of the Rules ; (i) the Appellant was not directly connected with the manufacture of goods for sale "inasmuch as they manufacture different shapes of finished goods of other Departments" and as such they were not liable to pay excise duty or observe any of the formalities under the Act and the Rules. The materials were supplied to the Appellant by the respective Departments of the Govt. of Orissa and the Appellant had merely undertaken the job-work. The ownership of the materials at all times remained with the State of Orissa and consequently the finished goods as well. The Appellant is, therefore, not a "manufacturer" ; (ii) there has been no "manufacture" by the Appellant, much less, of "goods" that can be bought and sold and known as such in the market ; (iii) if at all excise duty is leviable, it is to be levied upon and paid by the owner and not by the agent for manufacture ; (iv) in any event, the plates and sheets of steel used for the manufacture of the gates in question were already assessed to duty under item 26AA of the Central Excise Tariff and cannot be the subject-matter of further levy ; (e) in the hearing before the adjudicating officer, the Appellant further submitted that- (i) the raw materials for the manufacture of the gates in question are plates and sheets of steel falling under item 26AA of the First Schedule to the Act and they were already duty paid having been purchased by the respective Departments of the Govt. of Orissa from M/s. Hindustan Steels Ltd. and Notification No. MF (DRI) 70/73-C.E., dated 1-3-1973, as amended exempts from duty of such forms made from plates and sheets falling under sub-item (2) of item No. 26AA ; (ii) assuming that the gates in question are liable to excise duty under item 68 of the first Schedule, they are classifiable as job-work and the liability to duty is only to the extent of the work done in terms of Notification No. 119/75 dated 30-4-1975 ; (i) the gates in question are excisable in terms of item 68 of the First Schedule ; (ii) the Appellant commenced production from 1-7-1976 without obtaining a licence for manufacture in terms of Sec. 6 of the Act read with Rule 174 of the Rules and thereby contravened the aforesaid provisions; (iii) the Appellant had also removed the goods so manufactured without payment of duty and observance of the formalities and consequently contravened Rule 9 (1) read with Rule 173-PP of the Rules and thereby became liable to penal action in terms of Rule 173 of the Rules; and accordingly ordered duty to be determined and paid at 1% of the value of the goods cleared between 1-7-1976 and 17-6-1977 and 2% of the value of the goods cleared from 18-6-1977 till 23-11-1977, the date of the order. He further demanded payment of a sum of Rs. 20.860/- being the duty at 1% on 7 sets of radial gates supplied to the Executive Engineer in terms of the contract dated 24-1-1977 for a value of Rs. 20,86,000/- as the gates have been reported to have been removed prior to 23-11-1977. He also imposed a penalty of Rs. 250/- for violation of Rule 173-Q of the Rules and for manufacture of goods without licence ; (g) in appeal the aforesaid order of the adjudicating officer had been confirmed ; (a) the Appellant is not directly connected with manufacture of goods for sale as alleged ; the goods made to order in accordance with particular specifications are not saleable as such ; (b) there has been no manufacture since there was no qualitative change and no mass production ; (c) had the contract been looked into it would have shown clearly that the ownership in the raw materials was vested at all material times in the State of Orissa and the Appellant merely undertook the job of fabrication; (d) the Appellant was never the owner of the gates in question and consequently he is not a manufacturer as defined in Section 2-F of the Act ; (e) the gates made by the Appellant are not exigible to duty i.e.
imposed on manufacture of iron and steel products out of iron in a primary form. In any event since the raw materials were already duty paid the resultant product cannot be made liable to duty all over once again ; (f) the raw materials used were plates and sheets of steel falling under item 26AA of the First Schedule, were already assessed to duty and the articles fabricated out of them were exempt from payment of duty in terms of Notification No. MF (DRI) 70/73-C.E., dated 1-3-1973, as amended ; (g) even if the gates in question fell in item 68 of the First Schedule the manufacture is only on a job-work basis in which case the duty liability is limited to the remuneration for the work only in terms of Notification No. 119/75 dated 30-4-1975 ; (h) in any event duty is payable on manufacture and not on cost of erection and the consideration paid for erection has to be excluded for the purpose of reckoning the quantum of duty ; (i) in any view the Appellant was not required to take licence for the job-work undertaken.
3. We have heard Shri N.B. Choudhary, Project Engineer (Mech.) for the Appellant and Shri Mahesh Kumar for the Respondent.
4. It would appear to us on the submissions made and the perusal of the relevant papers that - (i) fabricated the gates in question in a factory using power and employing more than 49 workers and the factory was licensed under the Factories Act at the relevant time ; (ii) the radial gates in question meant for irrigation project were made out of sheets and plates of iron and steel pursuant to a contract with the State of Orissa ; (b) although at one stage in the adjudication proceedings it was contended that the gates in question were not "goods" that can be bought and sold and known as such in the market, the said contention would appear to have been given up. No specific ground on this issue was taken in the Revision. On the contrary the gates in question were all along described as "goods" in the grounds of Revision. Nor was it urged before us in the oral submissions that the gates were not "goods". Accordingly it should be taken that it is conceded that the gates in question were "goods" ; (c) once this is so, the contention that there has been no manufacture of excisable goods cannot sustain, because- (i) indisputably, the sheets of steel and iron have been transformed into new and different articles i.e. gates in question, having a distinct name, character and use ; (ii) for a manufacture to take place neither standardised mass production nor actual sale in the open market is either essential or relevant ; (iii) nor is ownership either in the raw materials or the finished products decisive in determining whether a manufacture had occurred or not. Even if, it may be that the raw materials as well as the finished product belong to someone else, the actual fabricator does not cease to be a "manufacturer" in accordance with the definition thereof in the Act. Once, therefore, the Appellant had brought into existence the gates, admitted to be goods, by fabrication either for himself or for others it cannot be contended that he is not a "manufacturer" himself, just because the owner of the gates is someone else ; (d) while it may be that the gates themselves are not made out of iron in a primary form but by use of duty paid iron and steel sheets, still, when the gates had been manufactured, they are assessable to duty, not as iron and steel products made out of iron in a primary form, nor even as iron and steel sheets falling within item 26AA of the First Schedule to the Act, but as goods falling within item 68 thereof, in view of the transformation that had taken place in consequence of the fabrication/manufacture. It is not as if duty is being levied twice over an iron and steel sheets. The gates that were manufactured were not merely iron and steel sheets ; (e) the reliance on Notification No. MF (DRI) 70/73-C.E., dated 1-3-L973 for exemption from payment of duty is misconceived inasmuch as the said Notification applies to galvanised forms, namely, ridges, ribs, channels, etc. made from plates or sheets of iron or steel falling under sub-item (2) of Item 26AA of the First Schedule.
Obviously, the gates in question are not galvanised forms as specified in the said Notification ; (f) similarly, the Appellant cannot claim the benefit of levy on merely the remuneration of job-work done in terms of Notification No. 119/75 dated 30-4-1975, for, the Notification defines "job-work" as comprehending solely a case where an article intended to undergo manufacturing process is supplied to the job worker and the identical article is returned after it has undergone the manufacturing process. That was not the case here. It was sheets of iron and steel that were supplied to the Appellant and he returned radial gates made out of them ; (g) when once the contract entered into by the Appellant revealed that it is a composite contract for design, fabrication and erection of the gates in question and the consideration payable for each item of work had not been separately quantified, it is difficult to accede to the contention that the transport and erection charges incurred by the Appellant are to be excluded from the computation of assessable value in terms of Section 4 of the Act.
5. For the aforesaid reasons, we see no merits in the Revision/Appeal and accordingly we dismiss it.