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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               57               (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. 58 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. 60