1991 (8) TMI 216 - AT - Central Excise

Summary

Issues:
Whether supplying raw materials to other units for manufacturing goods makes the supplier a manufacturer.

Analysis:
The appeal challenged an Order-in-Original passed by the Collector of Central Excise, Bangalore, holding the appellant as the manufacturer of steel furniture and parts thereof. The appellant supplied raw materials to four units and got steel furniture manufactured on their behalf. The Collector imposed penalties and ordered confiscation for alleged evasion of central excise duty. The key issue was whether the appellant could be considered the manufacturer based on supplying raw materials.

The appellant argued that the order was unsustainable as both the appellant and the other units were charged as manufacturers of the same commodity. They contended that mere supply of raw materials and payment for job work does not make the supplier a manufacturer. Citing various precedents, the appellant emphasized that the units were independent contractors and dealt on a principal-to-principal basis, not as employees or agents.

The Revenue justified treating the appellant as a manufacturer based on statements indicating that the units manufactured goods on behalf of the appellant, using raw materials supplied by the appellant. They argued that the definition of manufacturer is broad enough to include the appellant, relying on Supreme Court decisions.

The Tribunal analyzed the evidence and legal precedents cited. It noted that the definition of "manufacture" includes engaging in production on one's account or through hired labor. The Tribunal emphasized that merely supplying raw materials does not make the supplier a manufacturer unless the units were employees or agents of the appellant. The Tribunal found no evidence that the job workers were not manufacturers on their own account or that the arrangement was to evade duty.

Referring to relevant case law, the Tribunal concluded that the appellant was not the manufacturer of goods manufactured by the independent units. It held that the units operated independently, and the appellant's supply of raw materials did not establish manufacturing on behalf of the appellant. Relying on past decisions and considering the facts of the case, the Tribunal allowed the appeal, holding the appellant not liable for duty, fine, or penalty related to the goods manufactured by the other units.