2016 (11) TMI 689 - AT - Central Excise

Levy of duty - SSI exemption - use of brand name of others - Held that - suppliers of raw material cannot be held as manufacturers. The respondents herein have submitted supporting documentary evidences in the form of affidavit from job workers, details of raw material sent, quantity of items manufactured, ledger account confirming payment of job charges, copies of bills, invoices raised on each job workers, TDS certificate towards Income Tax deducted at source etc. Upon perusal of all these documents and evidences the lower authority concluded that the impugned items have been manufactured by various independent job workers in arrangement with the respondent and in the absence of any evidence placed on record by the department in support of the allegation that the respondents have actually manufactured said items in their factory, the duty liability cannot be sustained against them - appeal rejected - decided against Revenue.

Summary

Issues:
1. Appeal against non-payment of Central Excise duty by manufacturer.
2. Eligibility for small scale exemption.
3. Question of whether the respondents are liable to excise duty as manufacturers.
4. Examination of evidences supporting the nature of activities undertaken by the respondents.
5. Interpretation of the definition of "manufacture" under Central Excise law.

Analysis:
1. The appeal before the Appellate Tribunal CESTAT New Delhi was filed by the Revenue against an order of the Commissioner (Appeals) concerning non-payment of Central Excise duty amounting to ?14,68,384 by the respondents, who were involved in manufacturing novelty gift items and trading between 2003 to 2007.

2. The main contention raised by the Revenue was that the respondents, by using the brand name of another person, made themselves ineligible for the small scale exemption. The original demand of ?14,68,384 was reduced to ?12,65,848 by the original authority, which was set aside by the Commissioner (Appeals) in favor of the assessee, leading to the Revenue's appeal.

3. The argument put forth by the Revenue was that the respondents, by manufacturing items under the brand name of Amway, should be considered as manufacturers liable for excise duty. However, the respondents contended that they merely sent raw materials to job workers for processing and were not directly engaged in manufacturing the goods. They provided documentary evidence such as affidavits, payment details to job workers, and other supporting documents to substantiate their claim.

4. After examining the appeal records and the evidence presented, the Tribunal observed that the lower authority had correctly concluded that the items in question were manufactured by independent job workers in collaboration with the respondents. The Tribunal noted the lack of evidence from the Revenue to prove that the respondents themselves undertook the manufacturing process in their factory, leading to the rejection of the duty liability against them.

5. The Tribunal, based on the evidence and legal interpretations, upheld the Commissioner (Appeals) decision, emphasizing that the suppliers of raw materials cannot be considered manufacturers. The Tribunal found no grounds to interfere with the findings of the lower authority and dismissed the Revenue's appeal, affirming that the duty liability could not be sustained against the respondents.

This detailed analysis of the judgment highlights the key issues and the reasoning behind the decision rendered by the Appellate Tribunal CESTAT New Delhi in this Central Excise matter.