1987 (5) TMI 285 - AT - Central Excise

Summary

Issues:
1. Whether M/s. Aurofood Private Limited should be considered the manufacturers of metal containers or M/s. Indian Metal Industries.
2. Interpretation of the definition of "manufacturer" under Section 2(f) of the Central Excises and Salt Act, 1944.
3. Determining the party responsible for paying duty on the metal cans manufactured.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolves around the disagreement between the Appellant Collector of Central Excise and the Appellate Collector of Central Excise, Madras regarding the liability to pay duty on metal cans manufactured for M/s. Aurofood Private Limited by M/s. Indian Metal Industries. The Appellant argues that M/s. Aurofood should be considered the manufacturers of the metal containers based on the definition of "manufacturer" in Section 2(f) of the Central Excises and Salt Act, 1944. The Appellant contends that since the metal sheets were supplied by M/s. Aurofood and converted into metal containers by M/s. Indian Metal Industries for a fee, M/s. Aurofood should be deemed the manufacturers.

The counsels presented contrasting arguments before the Tribunal. The Counsel for the department asserted that M/s. Aurofood orchestrated the creation of the cans by engaging M/s. Indian Metal Industries for the job, thereby implying that M/s. Aurofood should be considered the manufacturers as they brought about the conditions for the cans' production. On the other hand, the Counsel for M/s. Aurofood emphasized that the two firms were independent entities, and the manufacturing of cans was a professional job undertaken by M/s. Indian Metal Industries for remuneration, absolving M/s. Aurofood of the manufacturing responsibility.

The Tribunal delved into the interpretation of the definition of "manufacturer" under the Act. It clarified that incidental or ancillary processes necessary for completing a manufactured product, such as painting or stamping, do not automatically confer manufacturer status. The Tribunal highlighted that M/s. Aurofood's role in supplying materials and engaging M/s. Indian Metal Industries for manufacturing did not transform them into manufacturers. Additionally, the Tribunal emphasized that M/s. Indian Metal Industries, as the entity directly involved in the production and manufacture of the cans, bore the legal responsibility for the production.

Ultimately, the Tribunal dismissed the appeal, ruling that M/s. Aurofood Private Limited should not be considered the manufacturers of the cans. The judgment unequivocally stated that M/s. Indian Metal Industries were the sole manufacturers of the cans and held accountable for the manufacturing process. The decision reinforced the principle that legal liability for excisable goods rests with the entity directly engaged in the production, emphasizing the independence of the two firms and rejecting the notion of deeming a party as a manufacturer when the manufacturing activities were outsourced.