2003 (12) TMI 391 - AT - Central Excise

Summary

Issues Involved
1. Whether R.P. Locks Co. are the manufacturers of locks bearing the brand name "Harrison."
2. Whether the processes undertaken by R.P. Locks amount to "manufacture."
3. Whether the exemption Notification No. 167/86-C.E. applies.
4. The role and liability of Remy Industries.
5. Demand of duty from M/s. Key Locks (India) based on shortages and job charges.
6. Penalties imposed on various parties.

Detailed Analysis

1. Whether R.P. Locks Co. are the manufacturers of locks bearing the brand name "Harrison."
The primary issue was whether R.P. Locks Co. (RPL) could be considered the manufacturers of locks bearing the brand name "Harrison." The Commissioner held that RPL got the parts of locks manufactured with the aid of power by Remy Industries, assembled them, and carried out processes like polishing, branding, and affixing MRP, making the locks marketable. Thus, RPL was deemed the manufacturer and not merely a trader.

2. Whether the processes undertaken by R.P. Locks amount to "manufacture."
The Tribunal analyzed whether the processes undertaken by RPL, such as branding, polishing, and affixing MRP, constituted "manufacture" under Section 2(f) of the Central Excise Act. The Tribunal referred to the Supreme Court's definition of "manufacture," which implies a transformation resulting in a new and different article with a distinctive name, character, or use. The Tribunal concluded that the processes undertaken by RPL did not bring into existence a new and different commercial commodity; thus, RPL was not the manufacturer.

3. Whether the exemption Notification No. 167/86-C.E. applies.
The Tribunal considered whether the exemption Notification No. 167/86-C.E. applied, which exempts goods manufactured without the aid of power. The Tribunal noted that the artisans did not use power in assembling the locks, and RPL did not use power in polishing, branding, or affixing MRP. Therefore, the benefit of the exemption notification could not be denied.

4. The role and liability of Remy Industries.
The Tribunal examined the role of Remy Industries, which was alleged to be an extended arm of RPL, manufacturing parts of locks with the aid of power. The Tribunal held that Remy Industries and RPL were separate legal entities, and the artisans who assembled the locks without the aid of power were the actual manufacturers. Consequently, penalties on Remy Industries and its partners were set aside.

5. Demand of duty from M/s. Key Locks (India) based on shortages and job charges.
The Tribunal addressed the demand of duty from M/s. Key Locks (India) based on shortages of locks and raw materials and job charges. The Tribunal found that the shortage of 4116 locks was not substantiated by evidence and remanded the matter to the Adjudicating Authority for reassessment. Similarly, the demands based on job charges and raw material shortages were remanded for re-examination in light of the appellants' submissions.

6. Penalties imposed on various parties.
The Tribunal set aside the penalties imposed on RPL, its partners, and Remy Industries, as it concluded that RPL was not the manufacturer of the locks. The penalties on Shri Anil Monga, Umang Monga, and Ravi Jain were also set aside.

Conclusion
The Tribunal concluded that R.P. Locks Co. was not the manufacturer of the locks bearing the brand name "Harrison," and the processes undertaken by them did not amount to manufacture. The demand of duty and penalties imposed on RPL and related parties were set aside. The issues concerning M/s. Key Locks (India) were remanded to the Adjudicating Authority for reassessment. All appeals were disposed of accordingly.