2007 (9) TMI 126 - AT - Central Excise

Principle supplier of material conducted packing and testing process as per standards and desired specifications Job worker completed basic manufacturing operation RM supplier shall be treated as manufacture and Job worker shall be allowed to avail SSI exemption

Summary

Issues:
Interpretation of manufacturing process under Rule 57F for availing small scale exemption.

Analysis:
The case involves an appeal by the Revenue against the order passed by the Commissioner (Appeals) regarding the manufacturing process of aluminum conductors by M/s Abhay Conductors. The appellant's manufacturing operations were closed for a period, during which raw materials were sent to M/s Prem Conductors for manufacturing the conductors. The Revenue alleged that M/s Abhay Conductors were not the manufacturers but merely testing the goods, which would exceed the small scale exemption limit. However, the Commissioner (Appeals) accepted that M/s Abhay Conductors were the manufacturers under the job work scheme, supported by a letter of permission from the jurisdictional Astt. Commissioner. The Commissioner relied on the contract with Gujarat Electricity Board, stating that testing and inspection were prerequisites conducted at M/s Abhay Conductors' premises, establishing them as the manufacturer.

The Commissioner (Appeals) based their decision on previous Tribunal judgments, such as Rolls Prints Packaging Ltd. and M/s D.S. Screen (P) Ltd., emphasizing that processes like inspection, counting, and packing done after processing inputs are ancillary to manufacturing. The Tribunal's decision in Powerica Ltd. highlighted that goods must meet specific parameters, like ISI markings, to be marketable. In this case, the goods at M/s Abhay Conductors underwent testing, inspection, and packing, making them marketable. The seized goods, duly entered in RG-1 register, could not have been confiscated. The appellate authority found no fault in the Commissioner's interpretation of the law and the contract clauses between the parties, concluding that the aluminum conductors completed their manufacturing process at M/s Abhay Conductors' premises.

Ultimately, the Appellate Tribunal rejected the Revenue's appeals, affirming the Commissioner (Appeals)'s decision. The judgment highlights the importance of understanding the manufacturing process under Rule 57F for availing exemptions and the significance of testing, inspection, and packaging in determining the manufacturer of goods.