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TMI Blog1990 (9) TMI 161X X X X Extracts X X X X X X X X Extracts X X X X ..... er disallowed the benefit of Notification 80/80 dated 19-6-1980 available to small s.c.ale units, as the total aggregate value of clearances of all excisable goods by M/s. Reckitt & Colman either by themselves or on their behalf clubbed together with clearances from the appellants' factory exceeded the exemption limit. The Addl. Collector of Central Excise levied duty upon the appellants for the goods manufactured and cleared during the period 19-9-1984 to 10-10-1984 and 28-6-1982 to 28-8-1982, appropriated the security deposit towards value of the goods seized but provisionally released and not returned to the Dept. and also imposed penalties on the appellants herein and upon M/s. Reckitt & Colman Ltd. Hence this appeal. 2. The point arising for determination in the appeal is whether affixing of labels with the aid of power amounts to a process in or in relation to manufacture and packing within the meaning of Notification 101/66. 3. We have heard Shri Jatin Ghosh, Bar-at-law for the appellants and Shri L.N. Murthy, for the respondents. 4. The appellants entered into a franchise agreement with M/s. Reckitt & Colman Ltd. under the terms of which the appellants were to manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ninna Chemical Works & Others v. Union of India -1981 (8) E.L.T. 617, the Hon'ble Gujarat High Court had occasion to deal with Notification 101/66 & interpret the meaning of the words "in or in relation to the manufacture." The court held that, "if any process carried on with the aid of power does not bring about any change in the raw material, it cannot be said that "any process in or in relation to the manufacture of an article has been carried on with the aid of power" because, before any operation can be characterised as a process, the commodity must, as a result of that operation, experience some change." The Court held that mere transfer of raw material by use of power from motor tank to storage tank cannot be considered a process of manufacture. We are unable to accept the distinction sought to be made by the learned DR between that case relating to use of power in transfer of raw material and the present appeal relating to use of power in labelling a finished product. In the light of the above dis.c.ussion, we hold that labelling is not a process of manufacture. 7. Now let us turn our attention to the question whether labelling is part of the process of packing. The labels ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... They further contended that after the completion of the manufacture, the finished goods were supplied to them and bills were raised. They used to honour the bills by checking the quality of the said goods. 11. The appellants took the defence that they had entered into an agreement with M/s. Reckitt & Colman of India for manufacturing and marketing the said goods. Their main defence was that theirs was a small s.c.ale unit and that they were manufacturing the said goods without the aid of power except the labelling, which was done with the aid of power. The transaction was bonaflde one on principal to principal basis. Their contention was that they were manufacturing the said goods without the aid of power and hence, were exempted under Notification No. 101/66 dated 17-6-1966 as amended. They contended that labelling is not packing while packing was done to protect the said goods and labels only indicate the name or identity of the product. 12. The learned Additional Collector in the order-in-original rejected the defences of both M/s. Reckitt & Colman as well as of the appellants. He held that the appellants were dummy concern as they did not undertake any manufacturing activity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 66 dated 17-6-1966. The use of power is only for affixing the labels which is not ancillary or incidental to the process of manufacture and hence the benefit of Notification No. 101/66 dated 17.6.1966 cannot be denied to them, as the notification does not apply to any factory manufacturing organic surface active agents (other than soap) surface active preparations and washing preparations, whether or not containing soap and in relation to manufacture and packing, no process is ordinarily carried on with the aid of power. 14. The questions that arise for consideration are (i) as to whether the demand confirmed on M/s. Reckitt & Colman of India is justified ? (ii) If the appellants are the manufacturers of the product, then are they entitled for claim of exemption of duty under Notification No. 101/66 as amended ? As regards the First question, it is now well settled that the job worker is the manufacturer in the case of Nocil v. Collector of Central Excise, Bombay 1985( 21) E.L.T. 252. Therefore, the finding of the learned Collector that M/s. Reckitt & Colman are the manufacturers has to be set aside and I hold that the appellants are the manufacturers of the product in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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