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TMI Blog1987 (6) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... r cigarette boxes) falling under T.I. 68 CET, but that they had not taken out a licence therefor. They were directed to show cause why they should not be called upon to take out a licence and file classification list as also price list. They were also called upon to show cause why exemption claimed by them in terms of notification No. 77/83 as amended should not be denied since the slides were manufactured by the appellants on behalf of M/s. ITC who were not eligible for any such exemption. On the above premises they were further called upon to show cause why an amount of Rs. 98,400.29P should not be demanded as duty from them in respect of slides manufactured and cleared during the period 30-8-84 to 10-2-85 and why duty should not be deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants were not entitled to duty-free clearances and must therefore take out a licence, file classification list, price list etc. and observe other excise formalities. 4. From the terms of the agreement between the appellants and M/s ITC (the relevant terms being extracted in the reply dated 29-4-85 to the show cause notice and also in the order of the Assistant Collector) it is seen that M/s ITC were to supply at their cost the ink and the board for manufacturing and printing the slides; the manufacture was to be strictly in accordance with the specifications and details of M/s ITC and to their satisfaction; the first set of cutting and creasing rollers and printing gluts were supplied by M/s ITC to the appellants, these being retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nufacture was to be to the specifications and details given by M/s ITC their operations were never supervised or controlled by M/s ITC. 5. On the question whether the raw materials supplier would, on the basis of such supply of raw material and the fact that the processing of the raw material into the processed product was to be to the specifications of the raw material supplier, be the actual manufacturer rather than the processor, has been considered by this Tribunal in its judgment in the case of M/s Multi Trade Overseas Corporation and others (Order No. 426 to 431/87-D, dated 26-5-87 in Appeal Nos. 3064 to 3068 and 3070 of 1984-D). It had been held that so long as the actual manufacturer was not a mere dummy for the supplier of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om long before the said agreement. Even after the said agreement they were carrying out the work of printing of cigarette slides on behalf of other customers. Except to the extent that the printing of cigarette slides for ITC was to be done by the appellants to the specifications and printing details laid down by ITC, with a right of rejection in the ITC for sub-standard material, M/s ITC had no right of control and supervision over the actual day to day work of the appellants. The supply of the board, ink and slide bromides, as well as the first set of cutting and creasing rollers and printing gluts, by the ITC was for the reason that the work to be done by the appellants on that material was to manufacture a product suitable for the ITC o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand, it appears to us that it is a very relevant circumstance to establish that the appellants were functioning independently of ITC, the relationship between the two being only of raw material supplier and manufacturer of the final product, each dealing with the other as principal to principal. The conclusion of the Assistant Collector that in view of the circumstances mentioned earlier the appellants were only hired labour under -ITC appears to us to be totally erroneous. 8. In the show cause notice reference had been made to Notification No. 305/77. It is mentioned that in terms thereof the appellants are to take out a licence etc. In the order of the Assistant Collector he held that in terms of notification No. 305/77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o ITC and there was no sale of either the raw material by the ITC or the finished product by the appellants. It is true that in such a circumstance there would be no difficulty in holding that the ITC would not be the manufacturer. But that does not mean that in the absence of sale of raw material to the processor and sale of the manufactured product by the processor it would be necessary to hold that the raw material supplier would be the actual manufacturer and not the processor. It has been already discussed as to when the raw material supplier would be the actual manufacturer and when he would not. 11. It may also be noted that while, on the one hand, the Department holds that M/s ITC were the actual manufacturers, the appellants ..... X X X X Extracts X X X X X X X X Extracts X X X X
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