1985 (2) TMI 265 - AT - Central Excise

Summary

Issues Involved:
1. Determination of the 'manufacturer' under Section 2(f) of the Central Excises & Salt Act, 1944.
2. Eligibility for exemption under Notification No. 80/80.
3. Duty payment on job work charges versus full duty on manufactured goods.

Summary:

1. Determination of the 'manufacturer' under Section 2(f) of the Central Excises & Salt Act, 1944:
The main question was whether M/s Praga Industries (P) Ltd., who supplied the raw materials, or M/s Modoplast (P) Ltd., who actually manufactured the Urea Formaldehyde Moulding Powder, should be considered the 'manufacturer'. The Tribunal referred to the inclusive definition of 'manufacturer' in Section 2(f), which includes both a person who employs hired labor and one who manufactures on his own account. The Tribunal concluded that M/s Modoplast (P) Ltd., who held the manufacturing license and operated independently, should be considered the manufacturer. This was supported by precedents from the Allahabad High Court and the Tribunal's Special Bench B.

2. Eligibility for exemption under Notification No. 80/80:
The respondents argued that they should be eligible for exemption under Notification No. 80/80 as they were the actual manufacturers. The Tribunal agreed, stating that the notification applies to the factory manufacturing the goods, irrespective of who supplied the raw materials. However, the Tribunal noted that the respondents must pay full duty on the manufactured goods to avail of this exemption.

3. Duty payment on job work charges versus full duty on manufactured goods:
The Tribunal observed a contradiction in M/s Modoplast's case, as they paid duty only on job work charges but sought exemption as manufacturers. The Tribunal clarified that to be treated as manufacturers for concessional assessment under Notification No. 80/80, M/s Modoplast must pay full duty on the manufactured Urea Formaldehyde Moulding Powder. Similarly, the Department's stance was contradictory as they demanded full duty from M/s Modoplast while considering M/s Praga Industries as the manufacturers. The Tribunal ordered that M/s Modoplast should pay full duty if applicable, and the Department should account for the manufactured quantities for the purposes of Notification No. 80/80.

Conclusion:
The Tribunal modified the Appellate Collector's order to the extent that M/s Modoplast (P) Ltd. should pay full duty on the manufactured goods to be eligible for exemption under Notification No. 80/80. The appeal was otherwise rejected.