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TMI Blog1988 (10) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the specification laid down by M/s. Kusum Products Ltd. from time to time; (ii) that the party should affix the Brand name of the goods and also pack the same in wrappers and boxes as per specification laid down by M/s. Kusum Products Ltd.; (iii) that the party should ensure that the goods supplied to M/s. Kusum Products Ltd., conform to the qualities and specifications prescribed by them. M/s. Kusum Products Ltd. may arrange technicians to be deputed to the manufacturing premises of the party for quality control at any stage of processing or packing to maintain quality control; (iv) that the party shall not claim any right or ownership, goodwill over the Trade Mark, Trade Name, Marking on label, Wrapper or packages or any of them which the party will be applying or use on the goods; and (v) that the selling price of spa cakes (125 grams) should be Rs. 7,400/- per ton and Mig (150 grams) at Rs. 7,020/- per ton plus excise duty, sale tax and any other taxes or levies as applicable from time to time etc. 2. Notification No. 83/83-C.E., dated 1-3-1983 exempted the goods described in the table below the Notification and falling under Tariff items mentioned against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ailable to the appellants, the goods actually attracted full duty and since these were cleared at Nil rate of duty, the appellants did not discharge all the obligations and liabilities cast upon them under Rule 9(1) read with Rule 52A and others. He has, therefore, held that the goods were removed in contravention of Rule 9(1) inviting the mischief of Rule 9(2) of the Central Excise Rules both for demanding duty and for imposition of penalty. Although Rule 9(2) has been invoked by the Additional Collector, he has not imposed any penalty under Rule 9(2) and 173-Q of the Central Excise Rules. He has only demanded duty for 6 months under Rule 9(2). 3. Arguing for the appellants, Shri N.C. Chakraborty, learned Consultant has contended that the appellants are independent manufacturers. The goods, though manufactured according to the specification laid down by M/s. Kusum Products Limited and in terms of the agreement signed between the two parties, were sold by the appellants to the latter on principal to principal basis. As such, the goods manufactured and cleared by the appellants should not be added to the goods cleared by M/s. Kusum Products Limited. If the products of M/s. Kusum P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was not available. Duty has, therefore, been correctly demanded by the Additional Collector in pursuance with the show cause notice dated 9-5-1984. He has also argued that as stated by the learned Consultant the period covered by the show cause notice was 23-11-1983 to 31-3-1984, i.e. within the normal period of six months as for demanding duty. The learned S.D.R. has, therefore, argued that duty demanded by the Additional Collector is perfectly in order. 6. We have considered the records of the case and the arguments of Shri Chakraborty and Shri Doiphode. Shri Chakraborty has cited several decisions in support of his contention that the appellants did not manufacture the goods for and on behalf of M/s. Kusum Products Limited and that they manufactured the goods on their own behalf and sold the same to the latter on principal to principal basis. In Cibatul Limited (Supra) -1985 (22) ELT 302 (S.C.) decided on 27-9-1985, Hon ble Supreme Court has held that the goods produced with buyer s trade mark cannot be said to be belonging to buyer nor the seller can be said to have manufactured goods on behalf of the buyer. In that case, according to the agreement between the buyer/customer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stion of clandestine removal, learned Consultant for the appellants has relied on three decisions in support of his contention that there was no clandestine removal by the applicant. In Murugan Company, Pudukottai v. Deputy Collector of Central Excise, Tiruchirapalli Others, reported in 1977 ELT (J 193), it is held that in cases where a particular manufacturer goes on producing certain articles under the bona fide, impression that the goods are not excisable goods and the departmental authorities also do not take any steps for bringing the goods under the excise levy as per Rule 9(1), the authorities cannot invoke Rule 9(2) on the ground that the goods have been cleared without payment of excise duty. The contention of the learned consultant is that the appellants, in the present case, were under the bona fide belief that they were the manufacturers of the goods and since their clearances did not exceed Rs. 5 lakhs they were not liable to pay any central excise duty under the notification cited earlier in this order. In 1978 ELT (J 180) in the case of Union Carbide Co. Ltd. v. Assistant Collector of Central Excise Others, it was held by the Calcutta High Court that unless the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n ble Supreme Court held that the buyer could not be treated as manufacturer nor the seller could be said to have produced the goods on behalf of the buyer. It was held the Hon ble Supreme Court that the seller manufactured the goods on his own and not on behalf of the buyer. The same ratio should apply in the present case also. Following this ratio, we, therefore, hold that in the present case the appellants were the manufacturers of Mig detergent bar and Spa detergent Cake and they were not manufacturing these products on behalf of M/s. Kusum Products Limited. In the result, the clearances of the appellants cannot be added to the clearances from the factory of M/s. Kusum Products Limited. Admittedly, the clearances of the appellants were less than Rs. 5 lakhs as stipulated in the Notification No. 83/83-C. E., dated 1-3-1983. Consequently, the appellants were entitled to the benefit of that notification. 9. As regards the second point, viz., clandestine removal, it has been argued before us that the classification list was filed by the appellants and the same was approved by the Department. The goods were also cleared under gate passes. The Additional Collector has held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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