1. M/s General Electric Co., Calcutta has filed a Revision Application before the Government of India and it is the Board's Order-in-Appeal No. 169/B of 1981 dated 28th February, 1981 wherein the Board upheld the order of the Collector of Central Excise, Calcutta and confirmed the demand for Central Excise duty of Rs. 37.500/. The short point for decision in this case related to assessment of Central Excise duty.
Main Starting Resisters assembled by the Appellants in the premises of M/s. Chittaranjan Locomotive Works under the supervision of their engineers and in accordance with the contract entered into by them with M/s. Chittaranjan Locomotive Works. The Appellants contend that some of the components required for assembling of the starting resistors were supplied by the C.L. Works and the Appellants procured the remaining components and assembled the finished product. They have also contended that the assembling of the final product was made with the help of less than ten labourers and that too without any aid of power. The Appellants initially paid Central Excise duty on the value of the job work namely Rs. 1,10,000/- but subsequently a demand for payment of duty on the entire value of resisters was raised. Shri J.N. Roy appearing on behalf of the appellants argued that the starting resisters are composed of seven components, namely-(1) Resistances (2) Insulator (3) Copper and Bus bars (4) M.S. Frame (Mild Steel) (5) Synthetic cover (Asbestos) (6) Washers (two types) namely made of bestoball and asbestos and Mild steel (7) Steel Tube. M/s C.L W.supplied only (!) and (2) items namejy Resistances and Insulators. All the balance items required for manufacturing the resisters were procured by the appellants who assembled them at the factory of C.L.W.since there was a strike in their own factory. Shri Roy cited the case of Madura Coats v. Union of India as reported in 1982 E.L.T 370 and 1980 E.L.T. 582 (Cal.) wherein it was decided that if a job worker is supplied with some materials, it does not take away from the fact that only job work was actually done and, therefore, Central Excise duty could be levied only on the value of the job work in terms of Noticafition No. 119/75, dated 30-4-75. The Departmental Representative reiterated the arguments stated in the Order-in-Original by the Collector of Central Excise, Calcutta and argued that the Central Excise duty in this case has rightly been levied on the value of the final product manufactured by the appellants since they were not entitled to the exemption under the aforesaid otification No. 119/75.
He cited para 8 of the Supreme Court judgment in the matter of Union of India v. Madura Coats referred to above. "The work he does, does not cease to be a job work within the meaning of exemption to the notification simply because he supplied some additional articles, but if the additional article has to be used in substantial proportion and constitutes an important element in the manufacturing, the work will not be a job work".
2. In the said case, the Respondent Company had supplied cotton yarn and total percentage of such yarn supplied by them in the final product was only 0.6%. On the other hand, in the present case, the Departmental Representative pointed out that the total value of the material supplied by the appellants is substantial and plays significant part in the total manufacture of the product. He, therefore, contended that the appellants are not entitled to the exemption under the notification No.119/75. Regarding the other argument that the appellants manufactured the resisters with only 8 workers and that too without the and of power, it appears that this was not raised before the Colllector of Central Excise, Calcutta and, therefore, the Board in its Appellate order had not taken it into consideration. Apparently, the appellants have not thought it fit to agitate this issue before the Collector of Central Excise, Calcutta. We, therefore, do not propose to go into this matter at this stage and in any case for want of any evidence on this, we are not in a position to pass any order on this issue.
3. Having considered the submissions made by both the parties, we are inclined to agree with the Departmental Representative. The appellants not only supplied their labour and expertise in the manufacture of Starting Resisters but procured and used substantial proportion of the raw materials and inputs required for the purpose. No evidence was produced by the appellants to show that the proportion of such inputs was not significant. Following the Supreme Court judgment referred to above, we uphold the Appellate order of the Central Board of Excise & Customs and dismiss the appeal.