1989 (11) TMI 147 - AT - Central Excise

Summary

Issues:
Manufacture and supply of steam to another factory, liability for excise duty, determination of the real manufacturer, suppression of facts, extended period of limitation.

Manufacture and Supply of Steam:
The case involved the appellant, engaged in manufacturing 'Patent and proprietary medicines,' allowing another company, IFFIUNIK, to install boilers in its premises. The jurisdictional Assistant Collector alleged that the appellant illicitly manufactured and supplied steam to IFFIUNIK, leading to a show cause notice for excise duty. The appellant contended that IFFIUNIK produced the steam themselves. The Collector concluded that the appellant was the real manufacturer based on various evidence.

Determination of Real Manufacturer:
The Collector's conclusion was based on factors like non-charging of rent, late issuance of debit notes, supply of water and oil, and laborers' payment history. However, the Tribunal analyzed the definition of 'manufacturer' under Section 2F of the Act, emphasizing that the appellant did not have a stake in producing the steam. The Tribunal inferred that the appellant merely assisted IFFIUNIK and acted as an agent, as there was no evidence of the appellant consciously producing steam for supply. The Tribunal highlighted the need to accept the inference favorable to the appellant when two possibilities exist.

Suppression of Facts and Extended Period of Limitation:
The appellant argued that they genuinely believed IFFIUNIK was the manufacturer, absolving them of any obligation to declare steam production. The Tribunal agreed, stating that there was no intentional suppression or fraud by the appellant. The Tribunal also criticized the invocation of an extended period of limitation, noting that the appellant's belief in IFFIUNIK's role negated any fraudulent intent. The Tribunal highlighted that the appellant's actions did not warrant a larger limitation period.

Conclusion:
The Tribunal allowed the appeal, setting aside the Collector's order. The Tribunal emphasized that the evidence did not conclusively establish the appellant as the manufacturer of steam. The decision was based on the lack of definitive proof and the appellant's genuine belief in IFFIUNIK's role. The Tribunal provided consequential relief to the appellant following the order's annulment.