1984 (4) TMI 307 - AT - Central Excise

Summary

Issues Involved:
1. Whether M/s. Meteor Satellite Ltd. is the real manufacturer of pistons manufactured by M/s. Telstar Electronics.
2. Whether M/s. Telstar Electronics was entitled to avail of the benefit of Notification No. 71/78, as amended by Notification No. 80/80, and exemption from licensing control under Notification 111/78.

Summary:

Issue 1: Whether M/s. Meteor Satellite Ltd. is the real manufacturer of pistons manufactured by M/s. Telstar Electronics.

The Tribunal examined whether Meteor Satellite Ltd. (Meteor) was the actual manufacturer of pistons produced by Telstar Electronics (Telstar). Meteor is a Public Ltd. Co., and Telstar is a registered partnership firm. Despite the fact that three partners of Telstar were also directors in Meteor, the Tribunal concluded that this commonality did not imply that Telstar was a dummy or camouflage for Meteor. The Tribunal referenced several judicial precedents, including *Philips India Ltd. v. Union of India* and *Jaswant Sugar Mills Ltd. v. Union of India*, which supported the view that common directors or partners do not automatically indicate that one entity is a facade for another. The Tribunal found no evidence of financial involvement or control by Meteor over Telstar. The transactions between the two were on a principal-to-principal basis, and Telstar had independent financial sources and operations. Therefore, the Tribunal held that Telstar was not manufacturing pistons on behalf of Meteor.

Issue 2: Whether M/s. Telstar Electronics was entitled to avail of the benefit of Notification No. 71/78, as amended by Notification No. 80/80, and exemption from licensing control under Notification 111/78.

The Tribunal considered whether Telstar was entitled to the benefits of the specified notifications. Notification No. 111/78 exempts manufacturers from licensing control, and Notification No. 80/80 provides concessions to small-scale units. The Tribunal noted that if Telstar's clearances were considered to be on behalf of Meteor, Telstar would not qualify for these exemptions. However, since the Tribunal determined that Telstar was an independent manufacturer and not an agent of Meteor, it concluded that Telstar was entitled to the exemptions and benefits under the notifications.

Conclusion:

The Tribunal set aside the Collector's order that held the goods produced by Telstar were manufactured for and on behalf of Meteor. Consequently, the penalties, confiscation, and redemption fines imposed on the appellants were also set aside. The appeal was thus allowed.