1999 (1) TMI 248 - AT - Central Excise

Summary

Issues involved:
1. Whether the appellants are manufacturers of the excisable goods.
2. Duty liability and penalty imposition on the appellants.

Analysis:

Issue 1: Whether the appellants are manufacturers of the excisable goods.

The appeal was against an Order-in-Original passed by the Additional Collector of Central Excise, holding the present appellants as manufacturers of pre-cast conveyor support beams, pre-cast fencing posts, and pre-cast concrete counter weights. The central question was whether the appellants should be considered manufacturers of these goods. The appellants argued that they had supplied raw materials to their contractors for the manufacture of these items at the project site. They contended that the dealing between them and the contractors was on a principle-to-principle basis, and there was no evidence of any extra commercial consideration or direct flow back from the contractors to the appellants. The Tribunal considered previous decisions and concluded that supplying raw materials to contractors for manufacturing goods did not automatically make the buyer the manufacturer. Therefore, the Tribunal held that the appellants should not be regarded as manufacturers of the said items.

Issue 2: Duty liability and penalty imposition on the appellants.

The Department had demanded duty from the appellants, confiscated the goods, allowed a redemption fine, and imposed a penalty. The Tribunal, after considering arguments from both sides and examining the facts of the case, disagreed with the conclusion that the contractors were responsible for discharging the duty liability. The Tribunal held M/s. India Cements as the manufacturer, not the appellants. Consequently, the Tribunal set aside the order to the extent that the appellants were not to be held as manufacturers of the three items, absolving them of any duty liability. As a result, the penalty imposed on the appellants for failure to follow Central Excise procedures was also set aside since there was no manufacture by them. The appeal was allowed in favor of the appellants on these grounds.

In conclusion, the Tribunal ruled in favor of the appellants, stating that they were not the manufacturers of the excisable goods in question. The decision highlighted the importance of the principle-to-principle basis in transactions involving the supply of raw materials for manufacturing and clarified that such transactions do not automatically establish the buyer as the manufacturer. The judgment emphasized the need for a careful examination of the facts and legal principles in determining duty liability and penalty imposition in excise matters.