TMI Blog1987 (5) TMI 148X X X X Extracts X X X X X X X X Extracts X X X X ..... others and hence they were not entitled to benefit under notification No. 198/76 and it was therefore proposed to recover from them the differential duty on the removals done earlier on payment of the concessional rate. The appellants sent replies claiming that they were entitled to benefit under the notification. After adjudication the Assistant Collector concerned passed orders upholding the claim made in the show cause notice and confirming the demands raised thereunder. The appeals filed against the said orders were rejected by the Appellate Collector under his consolidated order dated 20-2-1982. The appellants approached the High Court of Kerala claiming relief in respect of the said order and later, in terms of the order of the High Court dated 13-6-1984, preferred these appeals against the order of the Appellate Collector. 3. We have heard Shri Joseph Vellapally, Advocate for the appellants and Shri K.C. Sachar for the Department. 4. Tariff Item 3(2) CET is with reference to package tea. Therefore tea falling under T.I. 3(1) CET would again become exciseable under T.I. 3(2) CET on being packaged. That is to say, packaging by itself would constitute the manufacturing pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tio of the said decisions arrived at before the said ratio is applied to the facts of the present case for a proper disposal of the present appeals. 6. An early case that may be relevant in this connection would be Gangadhar Ramchander (1979 E.L.T. 59 Allahabad). That decision resolved on the definition of a manufacturer in sec. 2(f) prior to its amendment in 1964 (as may be seen from the fact that the decision was in a writ petition of 1958). The words if those are intended for sale (that were in the definition earlier) were omitted by the 1964 amendment. The question in that case was whether a miller who received oil seeds from others and converted the same into oil and returned the oil to the supplier of the oil seeds would be the manufacturer of the oil or the person who supplied the seeds. The Court held that the miller who converted the seeds into oil would be the manufacturer. But the said decision (relating to the pre 1964 section) would not be very relevant to our present case. 7. The Andhra Pradesh High Court had to consider this matter in the case of Andhra Pradesh Re-Rolling Mills (1979 E.L.T. 600). The issue was whether the Andhra Pradesh Rerolling Mills, which r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gnificance of that judgment in the present appeal is that the High Court pointed out the contradiction in the stand of the Deptt. in claiming that the real manufacturer was the person who granted the franchise but at the same time demanding duty in respect of the said goods from the franchise holder. 10. Another decision which appears to be appropriate to the facts of the present case is that of M/s Modo Plast (P) Ltd. (1985 Vol. 21 E.L.T. 187). In that case also, as in the present case, the Deptt. relied on the decision of the Supreme Court in the Shree Agency case (1987 E.L.T. 168 S.C.) and the judgment of the Bombay High Court in Shri Bajrang Gopilal case (now confirmed by the Supreme Court as reported in 1986(25) E.L.T. 609 (SC). In the case before the Tribunal the facts were that raw materials were supplied to M/s Modo Plast by M/s Praga Industries (P) Ltd. The actual manufacturing process for converting the raw materials into the exciseable product was by M/s Modo Plast. The Deptt. claimed that M/s Praga Industries were the actual manufacturers and hence M/s Modo Plast s claim for benefit under notification No. 80/80 was not sustainable. The Tribunal held, relying on certai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same) was again considered by the Tribunal in the case of Metal Box India Ltd. reported in 1986 (23) E.L.T. 187. The facts in the said case were that Metal Box India Ltd. supplied base paper to M/s Industrial Packaging who converted the base paper into waxed paper and delivered the same to the Metal Box India Ltd. after charging conversion charges. There also the deptt. relied on the Shree Agencies judgment to contend that Metal Box India Ltd. was the manufacturer. The decision of the Tribunal in M/s Britannia Biscuit Co. Ltd. (Order Nos. 204 to 207 of 84-D dated 19-4-1984) was distinguished on facts. 13. This issue was again considered by the Tribunal in the case of M/s Shakti Udyog (1986 Vol. 25 E.L.T. 423). The issue (arising under Notification No. 176/77-CE) was whether Shakti Udyog which supplied the stainless steel flats was the manufacturer of the stainless steel utensils made out of the said flats or whether four other firms which received the flats and converted them into the utensils on payment of charges therefor were the manufacturers. The Tribunal held that there can be no case of clearance on behalf of another but that the clearance can be by the manufacturer only, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that IEC were not better than hired labour as they received job charges only. 17. We find that another judgment which may also throw some light on this issue is that of the Madras High Court in P.M. Abdul Latif and others v. Assistant Collector of Central Excise (1985 (22) E.L.T. 758 (Mad) = 1983 ECR 55-D). The notification in issue in the said case was notification No. 176/77-CE. The question was whether benefit of the notification was available to persons who received raw materials from M/s Bharat Heavy Electricals Ltd. and converted the same into finished products according to the design and specification of Bharat Heavy Electricals Ltd. and received charges for said conversion from Bharat Heavy Electricals Ltd. It was common ground that if the said petitioners were to be held manufacturers they would be entitled to benefit under the notification. The contention for the Department was that the clearances of the goods were on behalf of BHEL who were the actual manufacturers and hence the benefit of notification was not available. The Madras High Court rejected the said contention. 18. It is therefore seen that in almost all the above cited decisions it has been held that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entities entering into the contract for their own benefit and were not mere dummies. As earlier pointed out, the decision in the Shree Agency case was on the basis of the finding of the lower authorities, which was accepted by the Supreme Court, and was to the effect that the cloth in question was manufactured by Shree Agency only by adopting a device of purported sale of yarn to the weavers and purported purchase of the fabrics from the weavers, the yarn price being inflated and fabric price being deflated leaving only the bare weaving charges to the weavers by way of hire charges. Further, the decision in that case turned on the wording of the notification to which reference has been made in para 13 supra. In view of the clear findings of the Assistant Collector himself (in our cases) as to the components which went to make up the remuneration payable to the appellants (including profit to themselves) there cannot at all be any conclusion that the appellants were mere dummies for the loose tea suppliers. 20. In the later portion of his order the Assistant Collector refers to the fact that the brand name owners were originally licensed to manufacture packaged tea but that they s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and, on that ground, duty is yet demanded not from the brand name owners but from the appellants. The learned counsel for the appellants submits that if the finding of the lower authorities that the appellants were not the manufacturers, and that the brand name owners were the manufacturers, is to be upheld, the Department should not merely not have demanded the differential duty from the appellants but must have taken steps to refund the 75% duty already collected. We have seen that this dichotomy in the stand of the Department had been commented upon by the Delhi High Court in the Poona Bottling Company case and the Madras High Court in the case of P.M. Abdul Latif cited supra. When Shri Sachar made his submissions for the Department he sought to justify the stand of the Department by contending that as the appellants claimed they are the manufacturers, and as they had paid only 75% of the duty as against the full duty payable, they were liable to pay the balance. We are unable to accept this argument. 23. Therefore, on a careful consideration of the facts of the case as well as the legal submissions we hold that it was these appellants that were the manufacturers of the packa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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