TMI Blog1996 (11) TMI 422X X X X Extracts X X X X X X X X Extracts X X X X ..... ges of Rs. 2.40 per kg. It was also pointed out that BIL have established office at their premises to monitor their own production under their supervision and to have their own audit on the stocks, production, quality and other technical aspects. They stated that the relationship is principal to principal basis. 3. On the basis of the agreement entered into between the appellant as well as BIL, it appeared to the department that BIL was exercising control and direction and they had control over the manufacture of the goods. Appellant had no ownership right in the manufacture of biscuits and in case of biscuits manufacture, BIL had the right to deduct and adjust or recover from the conversion charges, the cost of excess material used. The appellant could not dispose of the manufactured goods in case the product is not to the specification prescribed by BIL. The department was of the view that the job charges and the intrinsic value of raw materials supplied by BIL to the appellant and the appellants profit does not represent the wholesale cash price within the meaning of Section 4(1)(a). The department was also of the view that supply of the goods by the appellant to BIL cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant with the brand name affixed should be the basis of computation of the cost of the raw materials plus cost of manufacture or conversion plus the profit of the manufacturer, namely, job worker. The conversion charges of Rs. 2.86 per Kg. for both the varieties, namely Britannia Marie and Thin Arrowroot biscuits included the above components including the profits of the assessee. Therefore, there is no other expenses or item of expenditure incurred by the appellant and consequently no further addition is required to be given to the above computed value. They relied on the decision of the Hon ble Supreme Court in the case of M/s. Food Specialities Ltd. [1985 (22) E.L.T. 324 (S.C.)]. Thereafter adjudication proceedings were held. The learned Assistant Collector held that the appellants are liable to pay duty on the excess on the basis of which BIL sells the goods in the open market. Against that decision an appeal was filed before the Collector (Appeals), who dismissed their appeal. It is against this dismissal order that the present appeal is filed. 5. The learned Counsel contended before us that the appellants have made out a case for charging duty on the intrinsic value of the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ders are in accordance with law and submitted that the appeal may be dismissed. 8. The first point for determination is as to who is the manufacturer in this case. In this connection, the argument of the learned SDR is that M/s. BIL is supplying the raw materials and they are supervising the manufacture. Therefore, it is not a transaction on principal to principal basis. But, this argument of the learned SDR cannot be accepted in view of the several decisions of the Apex Court as well as the other decisions of the Tribunal. In the decision reported in 1996 (84) E.L.T. 161 (S.C.), the Hon ble Supreme Court at Paras 7, 8 and 9 held as follows :- 7. We have considered the submissions advanced before us by the learned Counsel on both the sides. We find force in the arguments of the learned Counsel for the respondents : on the admitted facts which we will set out immediately the respondents cannot be considered as manufacturers of agarbatti, amlapodi and dhup etc. manufactured in the premises of house-hold ladies as described above without the aid of power. The undisputed facts are that the respondents supplied raw materials for rolling incense sticks etc. to outside manufacturers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered into agreements with the three contracting parties fixing the rate for each of the contracts. The Board undertook to supply cement and steel obviously to ensure the quality of the products which were to be used by the Board itself. The specification of the raw materials for the preparation of the cement was also done only to ensure quality. There is nothing in the contract to indicate that three contractors would be in the position of hired workmen or that transactions were not on principal to principal basis. The fact that the Board would accept only those products which are according to the specifications of the Board and the contractors have to indemnify the Board for damaged poles are additional circumstances to hold that the Board was not the manufacturer and the transactions were on principal to principal basis. The circumstances relied on by the Lower Authority are not sufficient to come to a different conclusion. For the reasons indicated above, we hold that the Board cannot be regarded as a manufacturer in regard to the poles produced under the terms of the three contracts referred to above. It is therefore seen that mere fact that there was supervision by M/s. B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the appellants, the instruments so manufactured bore the brand name and ISI mark of the appellants, and they were also marketed by the appellants just like similar instruments in their own factory, the status of M/s. IEC was only that of hired labour. However, in the order there is no reference to the judgment of the Supreme Court in Ujagar Prints. Secondly, there is also no reference to the earlier cases of 3 Member Bench - Modo Plast and Metal Box India Ltd. Therefore, the order in H.S. Guru Instruments Ltd. is not relevant. We, therefore, of the view that the appellants are independent manufacturers and the duty is payable on the assessable value to be determined in accordance with the principle laid down in Ujagar Prints case (supra). 12. The principles laid down thereunder are to the effect that the appellants are independent manufacturers and the duty is payable on the assessable value as determined in accordance with the principles laid down in Ujagar Prints case. This principle of law cannot be disputed. Therefore, what is important is the principle laid down in Ujagar Prints case which is applicable to the facts of this case. 13. The learned Counsel also rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to Section 2(h), sale and purchase mean that the seller transfers the property in goods to the buyer for a consideration. The title in property i.e. in the raw materials as well as in the manufactured goods continued to vest in the BIL. Therefore, the question of transfer of property in goods by the seller to the buyer does not arise. Also the transfer of property in goods is for consideration. Here the consideration is the price. If the delivery of the goods by the appellant to the depots of BIL is to be treated as a sale the price at which they are selling it to the BIL does not represent the consideration at all. Therefore, it cannot be that the delivery of goods by the appellant to the depots of BIL is a sale. When the goods are delivered on the instructions of BIL to their depots there is no open market in existence. The goods are not available for purchase to anyone except to BIL. In other words, they are not freely available to all the wholesale dealers. Therefore, it is not a sale at arms length. Therefore, the job charges and the intrinsic value of the raw materials supplied by BIL and the appellants profit does not represent the wholesale cash price in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur attention to the two decisions of the Tribunal in support of the Asstt. Collector s order. The first is the decision in Pawan Biscuit Company Pvt. Ltd. v. CCE - 1991 (53) E.L.T. 595 = 1991 (37) ECR 315. In this case, the Tribunal after consideration of the agreement between the parties and other materials, concluded that the relationship between the supplier of raw material and the processor was not that of principal and principal but that of principal and agent and, therefore, the processing and manufacture must be taken to have been done by the supplier and not by the processor. Though the clarificatory order of the Supreme Court in Ujagar Prints Ors. v. UOI Ors. in 1989 (39) E.L.T. 493 = 1989 (21) ECR 1 (SC) = ECR C1347 SC was cited, no reference was made to the contents of the order. It was held that the Ujagar Prints case judgment reported in 1988 (38) E.L.T. 535 = 1988 (19) ECR 578 (SC) = ECR C1281 (SC) was not attracted to the facts of the case. This decision was followed by another Bench of the Tribunal in M/s. Azad Biscuits Co. (P) Ltd. Anr. v. CCE Appeal No. E/1264/91-A and E/3313/92-A (Final Order No. 100 and 101/95-A). It cannot be said that in the above case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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