TMI Blog1981 (7) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... copy of which is Annexure 'B' to the petition, informed the respondent No. 4 that their offer of sale of ribbons manufactured as per their specification was acceptable to the Company except that instead of the brand name "Rainbow" the plastic containers should bear the name of "Remington" on the top lid, the price tag inside the containers should bear the patented brand name of the Company and the plastic containers should be packed in card board boxes bearing the Company's name. This was agreed to by the respondent No. 4. Thereafter the respondent No. 4 manufactured ribbons as per their own specification and sold the same to the Company at a price mutually agreed upon with the brand name of the Company embossed on the plastic containers as well as the price tags put inside as aforesaid. 3. After the purchase the Company sent the goods to their various sales depots throughout India to be marketed through their selling organizations. The ribbons, were sold by the Company at a price fixed by them after adding the selling cost and profit on the price at which the Company had purchased the ribbons from the respondent No. 4. The Company has also been assessed on the trading profit ea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... took place in the factory of the Company and as such, according to Mr. Roy Chowdhury the Company cannot be deemed to be a manufacturer within the meaning of Section 2(f) of the Central Excises and Salt Act, 1944 (hereinafter "the Act") and the Respondent No. 3 by holding that the Company should be treated as manufacturer, has acted illegally and without jurisdiction. In support of this argument, Mr. Roy Chowdhury has referred to some decisions, to which I shall presently refer. 8. Mr. N.C. Roy Choudhury appearing on behalf of Respondent Nos. 1, 2 and 3 does not seriously dispute Mr. Subrata Roy Chowdhury's contention that the Assistant Collector erred in coming to the conclusion that the petitioner Company was a manufacturer within the meaning of Section 2(f) of the Act. Mr. Roy Chowdhury, however submitted that the Central Govt. in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules exempted the Respondent No. 4 from the payment of Central Excise duty on typewriter ribbons manufactured by them subject to the conditions laid down in the notification. According to Mr. Roy Chowdhury, the said respondent should not get the benefit of this exempti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. being of the same position of the loan licensee should be treated as manufacturer within the meaning of Section 2(f) of Central Excise Salt Act, 1944." 11. In Civil Rule No. 8755(W) of 1976 which was disposed of on 10th June, 1980 S.C. Deb, J. was dealing with a similar question, which arose out of an application preferred by M/s. Mazda Lamps Company Ltd., which was sought to be made liable for payment of excise duty because they had purchased electric bulbs from Hind Lamps Ltd. with their brand name embossed on the manufactured bulbs. The learned Judge made the rule absolute and quashed the impugned show cause notice and held that the petitioner company was not to be treated as a manufacturer in view of the fact that they did not participate in the manufacture of lamps and also did not employ any hired labour in the production and manufacture of the said goods. 12. Similar question also arose for consideration before the Allahabad High Court in the case of Philips India Ltd. Ors. v. Union of India Ors. reported in 1980 E.L.T. 263. The court was dealing with a case where the petitioners besides manufacturing electric lamps at their own factories also purchased lamps an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctricals would not make them the manufacturer, nor can it be said that the goods were manufactured on behalf of the customer because by affixation of the label the goods did not change their identity nor did they become some new or different product. 14. Similar view was expressed on a Revision petition filed by Smat Bottling Co. Ltd. before the Government of India, Ministry of Finance. The order is reported in 1980 E.L.T. 333. It is inter alia stated to the effect that merely because the goods are produced with the third party's brand name under a franchise agreement with such third party, the actual manufacturer cannot be said to be producing the goods for or on behalf of such third party especially when they were themselves Central Excise Licensees and were being assessed to Income-tax and sales tax independently. 15. Coming back to the instant writ petition, in paragraph 11 thereof, the petitioners have craved for leave to refer to an affidavit affirmed by Shiv Kumar Agarwal, Proprietor of M/s. Rainbow Ribbon Industries, copy whereof is annexure 'F' to the petition. It appears from paragraph 3 of the said affidavit that M/s. Rainbow Ribbon Industries were exempted under Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pany was in the same position as a loan licensee and should be treated as a manufacturer within the meaning of Section 2 (f) of the act and there was no basis or material whatsoever for such finding. From the impugned order if is also apparent that the officer concerned completely overlooked the fact that M/s. Rainbow Ribbon Industries were the actual manufacturers and they had filed the necessary return before the Excise authorities and had also paid the sales tax and income-tax in respect of the typewriter ribbons which formed the subject matter of the present case. Therefore, by passing the impugned order the same goods would have been subjected to double taxation had the goods not have been covered by the exemption under the notification issued under Rule 8 (i) of the Central Excise Rules. As such, the impugned order has to be set aside. 18. I, accordingly, make the rule absolute and quash the order passed by the Assistant Collector of Central Excise, copy of which is Annexure 'E' to the petition. There will also be a declaration in terms of prayer (a) of the petition. Interim orders, if any, are vacated. There will be no order as to costs. As regards the submission of Mr. N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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