1985 (5) TMI 135 - AT - Income Tax

Summary

Issues: Determination of value of clearances for duty exemption under Notification No. 158/71.

Analysis:
1. The appeal revolved around the value of clearances by the appellants to ascertain their eligibility for duty exemption under Notification No. 158/71. The Assistant Collector of Central Excise included the value of certain components in the clearances, which was contested by the appellants.

2. The Appellate Collector upheld the inclusion of the value of bolts, nuts, and screws in the clearances but excluded the value of the outer spring eye. The appellants challenged this decision, arguing that the manufactured components by others using raw materials supplied by them should not be considered as goods manufactured by the appellants.

3. The appellants contended that supplying raw materials to other manufacturers did not make them the manufacturers of the final components. They relied on various legal precedents to support their argument. The respondents defended the lower authorities' decisions.

4. The Appellate Collector's decision was based on a previous order where it was concluded that the manufacture of components by others using raw materials supplied by the appellants should be considered as the appellants' manufacture. However, the appellants argued that this conclusion was not supported by the evidence presented.

5. The Tribunal noted that the evidence did not establish that the manufacture by others was on behalf of the appellants. The use of the term "ancillary" in the Assistant Collector's order was explained as not implying a strict relationship between the manufacturers. The show cause notice did not provide sufficient grounds for such a finding.

6. Legal principles were cited to emphasize that supplying raw materials does not automatically make one a manufacturer for another. The Tribunal accepted the appellants' explanation regarding the term "ancillary" and concluded that the Appellate Collector's finding was not justified based on the available evidence.

7. Ultimately, it was agreed that excluding the value of bolts and nuts from the clearances would place the appellants within the exemption limit of Notification No. 158/71. Consequently, the appellants were deemed eligible for the concession, and the demand against them was set aside, with the appeal being allowed.