Full Judgment Text
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PETITIONER:
PUNJAB FOOTWEAR LTD.
Vs.
RESPONDENT:
C.C.E.
DATE OF JUDGMENT26/10/1994
BENCH:
SINGH N.P. (J)
BENCH:
SINGH N.P. (J)
SAHAI, R.M. (J)
CITATION:
1995 SCC (1) 55 JT 1995 (1) 129
1994 SCALE (4)734
ACT:
HEADNOTE:
JUDGMENT:
The Judgment of the Court was delivered by
N.P. SINGH, J.- 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 purposes
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 has 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 reads as
follows:
"In exercise of the powers conferred by sub-
rule (1.) 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 16-3-1976, the
Central Government hereby exempts footwears
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falling under sub-item (1) of Item 36 of the
first schedule to the Central Excises and Salt
Act, 1944 (1 of 1944), from the whole of the
duty of excise leviable thereon:
Provided that:
(i) 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
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(ii) The total equivalent of power used in
the manufacture of such footwears 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 benefit 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 footwears’ occurring in proviso
(i) has to be read with reference to the footwears
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 (sic) 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
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manufacturers in whose factory including the precincts
thereof, not more than 49 workers are 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.
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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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