2018 (11) TMI 915 - HC - Central Excise

Process amounting to manufacture or not? - Review petition - liability of Central excise duty - stand of the department was that the assessee was not only involved in the activity of branding, polishing, affixation of MRP, packing etcetera but as a matter of fact the parts are made available by the firm to the suppliers - Held that - The Assessee is a manufacturer of lock, it is wrong to assert that the Court has not answered all the issues which were formulated. The said finding is in consonance with the Section 2(f) of the Central Excise Act, 1944 which says that the word manufacturer is to include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacturer on his own account - A perusal of the facts available on record reveals that the R.P. Locks right from raw material stage upto the finished stage have been controlling the entire manufacturing activity and even sample, funds and design including raw material is made available by them. - Activity is a manufacturing activity. - Order as reported in 2017 (3) TMI 1721 - ALLAHABAD HIGH COURT affirmed. Review application has no merit and is dismissed.

Issues Involved:
1. Whether the Tribunal was justified in holding the Assessee not a manufacturer of "Harrison" brand locks.
2. Whether the definition of 'manufacturer' in Section 2(f) of the Central Excise Act, 1944, covers the activities performed by the Assessee.
3. Whether the Tribunal's judgment, which did not reverse the findings of the Commissioner of Central Excise, is sustainable.
4. Whether the judgment in CCE, Baroda Vs. M.M. Khambhatwala is applicable to the case.

Detailed Analysis:

Issue 1: Justification of Tribunal's Decision on Manufacturer Status
The court examined whether the Tribunal was justified in holding that the Assessee was not a manufacturer of "Harrison" brand locks. The Tribunal had ignored the fact that the Assessee supplied parts/raw materials to laborers, paid them for assembling, and then performed processes like polishing, nickeling, and branding at its premises. The court concluded that these activities cumulatively result in the manufacture of a new item, i.e., locks of a particular brand, and thus amount to manufacturing as defined in Section 2(f) of the Central Excise Act, 1944.

Issue 2: Definition of 'Manufacturer'
The court evaluated whether the definition of 'manufacturer' under Section 2(f) of the Act includes the activities performed by the Assessee. It was determined that the inclusive definition of 'manufacturer' would cover the various activities referred to, such as supplying raw materials, assembling, and branding, thereby meeting the criteria under Section 2(f).

Issue 3: Sustainability of Tribunal's Judgment
The court reviewed whether the Tribunal could hold the Assessee not to be a manufacturer without reversing the findings of the Commissioner of Central Excise. The Tribunal's judgment was found unsustainable because it did not address or reverse the Commissioner's detailed findings regarding the Assessee's manufacturing activities.

Issue 4: Application of CCE, Baroda Vs. M.M. Khambhatwala
The court considered whether the judgment in CCE, Baroda Vs. M.M. Khambhatwala was applicable. It was concluded that the Tribunal wrongly applied this precedent, as the facts of the present case were different. The Assessee's activities went beyond mere branding and included significant manufacturing processes.

Review Application Analysis:
The review petitioners argued that there were factual and legal errors in the judgment dated 24.3.2017, including the lack of specific findings on the maintainability of the appeal. The court clarified that the grounds for review under Order 47 Rule 1 CPC are specific and do not include re-hearing an erroneous decision. The court emphasized that review jurisdiction is limited to correcting patent errors and not for re-evaluating the entire case.

Conclusion:
The court found no merit in the review application, stating that the judgment had addressed all relevant issues comprehensively. It was reiterated that the Assessee was indeed a manufacturer under Section 2(f) of the Central Excise Act, 1944, and the Tribunal's judgment was rightly set aside. The review application was rejected, with parties bearing their own costs.

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