1990 (3) TMI 88 - HC - Central Excise

Summary

Issues Involved:
1. Determination of the real manufacturer of electrical laminations.
2. Validity of the show cause notice issued to Apex Electricals.
3. Legality of the prosecution against Apex Electricals.

Summary:

Issue 1: Determination of the Real Manufacturer
Apex Electricals Pvt. Ltd. and six other petitioners challenged the view that Apex Electricals was the real manufacturer of electrical laminations produced by six processors. The respondents argued that the processors were manufacturing the laminations for and on behalf of Apex Electricals, making Apex Electricals the real manufacturer. The court found no material evidence to support that the processors were financially or otherwise controlled by Apex Electricals. The processors were independent entities, managed independently, and carried out job work without Apex Electricals' control or supervision. The court concluded that the transactions were on a principal-to-principal basis, and the processors were not dummies of Apex Electricals.

Issue 2: Validity of the Show Cause Notice
The show cause notice issued to Apex Electricals was challenged as time-barred and without jurisdiction. The court noted that the processors had disclosed all relevant facts to the excise authorities, and there was no suppression or concealment of true facts. Therefore, the show cause notice issued within the extended period of five years was deemed unjustified. Consequently, the show cause notice and the order passed by the Collector of Customs and Central Excise were quashed and set aside.

Issue 3: Legality of the Prosecution
The prosecution against Apex Electricals, based on the Collector's order, was also challenged. Given the court's finding that Apex Electricals did not commit the alleged offense, the prosecution was quashed.

Conclusion:
The court declared the actions of the excise authorities as illegal, quashed the show cause notice and the Collector's order, and set aside the prosecution against Apex Electricals. The petitions were allowed with no order as to costs.