1997 (9) TMI 389 - AT - Central Excise

Summary

Issues:
1. Whether a loan licensee can be considered a manufacturer entitled to exemption under Notification No. 175/86.
2. Whether affixation of a brand name by the loan licensee affects eligibility for exemption.
3. Applicability of judgments in determining the manufacturer of goods.

Analysis:

1. The Revenue appealed against the lower appellate authority's decision that a loan licensee qualifies as a manufacturer under Section 2(f) and is eligible for exemption under Notification No. 175/86. The lower authority held that goods manufactured by a loan licensee, even without owning a factory, are entitled to the exemption subject to fulfilling all conditions of the Notification.

2. The Revenue contended that a loan licensee cannot be considered a manufacturer entitled to the exemption since the licensee is not registered with the Director of Industries as required by Para 4 of the Notification. The affixation of the loan licensee's brand name on the goods might disqualify them from the exemption under Para 7 of the Notification.

3. The learned SDR cited the Supreme Court's judgment in Union of India v. Cibatul, emphasizing that the actual manufacturer, not the brand name owner, is considered the manufacturer. Additionally, reference was made to a Tribunal judgment in Harts Coca Pvt. Ltd. The Tribunal noted that previous decisions favored the respondents, citing cases such as N.P. Industries and Onyx Laboratories. The Tribunal differentiated the case from Cibatul, stating that the loan licensee, Medifield Pvt. Ltd., operated under its own control and supervision, fulfilling the conditions of the Notification.

4. Despite the respondents' absence, the Tribunal proceeded based on established precedents. The Tribunal highlighted that the loan licensee, Medifield Pvt. Ltd., manufactured goods under its own supervision in the appellant's factory. As Medifield previously availed benefits under Notification No. 85/85, it was entitled to benefits under Notification No. 175/86. Therefore, the Tribunal upheld the lower authority's decision, dismissing the Revenue's appeal.

In conclusion, the Tribunal affirmed that a loan licensee can be considered a manufacturer entitled to exemption under Notification No. 175/86, provided all conditions are met. The affixation of the loan licensee's brand name does not disqualify the goods from the exemption. The judgments cited supported the view that the actual manufacturer, in this case, Medifield Pvt. Ltd., qualifies for the exemption.