2001 (11) TMI 594 - AT - Central Excise

Summary

Issues:
Whether M/s. Vishrut Investment & Traders Pvt. Ltd. and M/s. Uchit Investment & Traders Pvt. Ltd. were job workers or hired labor of M/s. ISPL, making M/s. ISPL the manufacturer under the Central Excise Act, 1944.

Analysis:
The judgment involved seven appeals with common facts arising from the same order. M/s. ISPL Inds. Ltd. ceased manufacturing in 1983, while M/s. Vishrut and Uchit were established in 1984 and 1982, respectively. The excisable goods were manufactured by the latter two on a job work basis without formal agreements. Allegations were made that M/s. ISPL was the actual manufacturer, leading to a demand of Rs. 71,74,842.28. The Commissioner confirmed the demand, reversed Modvat credit, and imposed penalties on individuals associated with the companies.

The main issue was whether M/s. Vishrut and Uchit were job workers or hired labor of M/s. ISPL. The Commissioner upheld the allegations based on various grounds, including advice on value declaration, production planning, cost bearing, and control exerted by M/s. ISPL. The Commissioner dismissed the plea of limitation, considering the activities as an attempt to evade duty. The judgment cited precedents to support the decision that M/s. ISPL was the manufacturer, not the job workers.

Challenges were raised regarding the cost of defective goods, funding of the units, and control over manufacturing activity. The Commissioner did not address these arguments adequately. The judgment referenced previous cases where job workers were considered manufacturers based on ownership of raw materials, machinery, labor, and lack of management control.

Ultimately, the Tribunal concluded that M/s. Vishrut and Uchit were the manufacturers, absolving M/s. ISPL of duty liability. Since the duty amount paid by the former was not disputed, subsidiary issues were not delved into. The appeals were allowed, granting consequential relief as applicable.