2008 (9) TMI 682 - AT - Central Excise

Summary

Issues:
Waiver of pre-deposit of duty and penalties based on the interpretation of notification No. 50/2003-C.E. regarding the status of M/s. M.J. Industries as an independent manufacturer or an agent of M/s. Gillette India Pvt. Ltd.

Analysis:

The case involved applications for the waiver of pre-deposit of duty amounting to Rs. 67,72,38,240/- and penalties by the applicants, M/s. Gillette India Pvt. Ltd., after the demand was confirmed on them due to the denial of the benefit of notification No. 50/2003-C.E. The dispute arose from the status of M/s. M.J. Industries, a job worker of M/s. Gillette India Pvt. Ltd., as an independent manufacturer or an agent of the latter. The contention was that M/s. M.J. Industries was an independent manufacturer, as per the agreement, with necessary premises and machinery for job work, and hence, eligible for the exemption under the notification.

The Revenue, on the other hand, argued that M/s. Gillette India Pvt. Ltd. was the actual manufacturer of the goods, and since no declaration was filed by them for claiming the notification's benefit, the demand was valid. It was emphasized that the declaration filed by M/s. M.J. Industries did not mention M/s. Gillette India Pvt. Ltd. as the manufacturer, and the terms of the agreement indicated M/s. M.J. Industries was an agent, not an independent manufacturer. The adjudicating authority had also ruled in favor of considering M.J. Industries as an agent, thereby rejecting the exemption claim.

The Tribunal, after considering the arguments, found merit in the applicants' submissions. It noted that M.J. Industries had the necessary infrastructure and workforce for job work, indicating independence in manufacturing activities. Additionally, it recognized that the actions of an authorized agent bind the principal, supporting the view that the declaration by M.J. Industries was sufficient for claiming the notification's benefit. Consequently, the Tribunal waived the pre-deposit of duty and penalties, allowing the stay petitions.

In conclusion, the judgment revolved around the interpretation of the notification requirements and the determination of M/s. M.J. Industries' status as an independent manufacturer or an agent of M/s. Gillette India Pvt. Ltd. The Tribunal's decision to grant the waiver was based on the finding that M.J. Industries operated independently and fulfilled the conditions for exemption, despite the Revenue's argument against it.