1992 (3) TMI 223 - AT - Central Excise

Summary

Issues:
- Eligibility for small scale exemption under Notification No. 175/86 for detergent washing cakes.
- Ownership of goods manufactured on behalf of another party.
- Clubbing of total clearance value for exemption calculation.
- Interpretation of manufacturing for and on behalf of another entity.
- Applicability of previous tribunal judgments on similar issues.

Eligibility for Small Scale Exemption:
The appeals involved a dispute regarding the eligibility of M/s. Synthetic Detergents Limited for small scale exemption under Notification No. 175/86 for detergent washing cakes. The respondents claimed the exemption for 'MORE' detergent cakes manufactured with the brand name of M/s. Blaze Enterprises (P) Ltd. The Assistant Collector rejected the refund claim based on the total value of 'MORE' detergent cakes exceeding the limit of Rs. 75 lakhs. However, the Collector (Appeals) allowed the refund claim, leading to the Revenue filing the appeals.

Ownership of Goods Manufactured on Behalf of Another Party:
The main argument presented by the appellant was that ownership of goods does not pass when manufactured on behalf of another party using raw materials supplied by that party. The appellant contended that the respondents merely converted raw materials supplied by M/s. Blaze Enterprises and charged conversion charges. It was highlighted that M/s. Blaze Enterprises had authorized the respondents to follow all procedures under Central Excise Law on their behalf. The appellant argued that all clearances of 'MORE' detergent cakes by the respondents should be considered as manufactured and cleared by M/s. Blaze Enterprises, affecting the eligibility for exemption.

Clubbing of Total Clearance Value for Exemption Calculation:
The issue of clubbing the total clearance value of M/s. Blaze Enterprises from other factories with the value of 'MORE' detergent cakes cleared by the respondents during the relevant period was crucial. The appellant emphasized that the total clearance value exceeded the limit for exemption under Notification No. 175/86, impacting the eligibility of the respondents.

Interpretation of Manufacturing for and on Behalf of Another Entity:
The crux of the matter revolved around whether the respondents could be deemed as manufacturing for and on behalf of M/s. Blaze Enterprises. The Tribunal analyzed the relationship between the parties and the absence of any financial ties or profit flow back. Previous judgments were cited to support the argument that the respondents were independent units and not dummy units created by M/s. Blaze Enterprises. The Tribunal concluded that the respondents were entitled to the refund claim based on the interpretation of manufacturing for and on behalf of another entity.

Applicability of Previous Tribunal Judgments:
The respondents relied on previous tribunal judgments, including the case of M/s. Blaze Enterprises Pvt. Ltd. v. Collector of Central Excise, Bangalore, where it was held that the respondents were independent units and not dummy units created by M/s. Blaze Enterprises. The Tribunal found that the decision in the cited case applied to the present situation, supporting the entitlement of the respondents for the refund claim. The Tribunal upheld the findings of the Collector (Appeals) based on the precedent set by previous judgments, ultimately rejecting the appeals for lacking merit.