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TMI Blog1986 (10) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... ied raw materials to different manufacturers who manufactured bolts and nuts on their behalf on payment of job charges, during the period of April, 1977 to November 1981 and during which a quantity of 96,154.8 kgs. bolts and nuts valued Rs. 531,576.80 were manufactured. The department called upon the company by a notice dated 2-2-1982 to show cause why they should not pay duty amounting to Rs. 66,869.35, why the seized goods weighing 44,618.50 kgs. seized from them should not be confiscated and why penalty should not be imposed on them under rule 173Q. 2. The company argued that they could not be held to have manufactured the goods, bolts and nuts; they were manufactured by different independent manufacturers on payment of charges. The activity of the company in giving raw material to various manufacturing units and getting goods manufactured did not mean that they (company) had become a manufcaturer of the bolts and nuts. The liability to pay central excise duty was always on the manufacturer of the goods and in this case the goods were manufactured by others out of the raw materials supplied by themselves. The duty liability will, therefore, rest on the person who actually ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not applicable, because the Supreme Court had before it a dispute on exemption of Cotton fabrics manufactured by or on behalf of the same person in one or more factories commonly known as powerlooms (without spinning plants) in which less than 5 powerlooms in all are installed. As can be seen from paragraph 9 of the judgment, the appellants argued that the cotton fabrics were really manufactured by the 16 weavers, whose details were given by the appellants, the cases of 14 of whom were covered by clause (10) of the notification dated March 1, 1956 and the appellants merely purchased the same from the weavers. The findings of the Assistant Collector reproduced by the Hon'ble Supreme Court throw much light on the case. He said at one point : I am unable to believe that any genuine trader will enter into such a transaction on moral hazard unless he has got definite interest on the goods produced at the factories. It is very interesting to note that even up to the date of personal hearing M/s. Shree Agency was not in a position to know what amount was recoverable from the powerloom factories to whom they say they have supplied yarn on credit and advanced money every week during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Agency. It tacitly agreed with the Assistant Collector who said "in my opinion, the employment of looms is the, vital factor for consideration in such case." The question, therefore, was whether they employed the looms from the 16 factories for the manufacture of cloth for themselves or not after December, 1956. He observed that "Under these circumstances, I am unable to agree with your contention that you ceased to employ looms from the individual factories after December, 1956." The Assistant Collector came to this conclusion after agreeing that one out of the 16 factories manufacturing cloth on behalf of the appellant was a licenced one and, therefore, the demand was revised to Rs. 43,020.00 from Rs. 52,290/-. A licenced unit obviously could not have been a false front or a cover. All through we see that the lower authorities like the Assistant Collector and the Collector were concerned with proving that the cloth weaving factories or units were not independent but were employed by Shree Agency to make cloth for themselves. This is an activity that disentitled the cotton fabric to the exemption since on the facts established by the Assistant Collector and accepted by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd turn out cans. Such a man is a man who hires labour to manufacture cans and so engages himself in their manufacture. He is directly and visibly involved in the process of manufacture, in the act of forming and manipulating and fabricating cans from sheets either manually or with the aid of machinery. That person may manufacture the cans for himself or for another, but he engages in their production on his own account. But because he undertakes to make cans for another customer for a consideration, he cannot be said to have hired himself out to other persons for the manufacture of cans or that the customer engages in the manufacture of cans. The difficulty in the interpretation given by the Collector is that there will be two manufacturers in such a case, the so-called person who engages himself and the person who actually manufactures the goods, the hired labourer. 12. Rule 9 prohibits the removal of excisable goods from "any place where they are produced, cured or manufactured or any premises appurtenant thereto etc. etc. until excise duty leviable thereon has been paid". If we say that M/s. Techma were the manufacturers of the bolts and the nuts, what is the place from w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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