9911796707
TMI Blog1994 (8) TMI 138X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-1987 to 31-7-1988 the appellants had manufactured and cleared P.P. Medicines bearing the brand name of M/s. Morgendew Laboratories valued at Rs. 10,91,272.00 which were not eligible for exemption under Notification No. 175/86 dated 1-3-1986 as amended by Notification No. 223/87 dated 2-2-1987 which provided that P.P. Medicines affixed with brand name of a person who was not eligible for exemption in terms of Notification No. 175/86-C.E. dated 1-3-1986 would not be eligible for exemption under the notification. By the impugned order the Collector confirmed the demand for Rs. 1,20,947.24 under Rule 9(ii) read with Section 11A(1) of Central Excises and Salt Act, 1944 on the ground that P.P. Medicines bearing the brand name of M/s. Morgendew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utory records and without payment of duty. Thus in addition to confirmation of two demands totaling Rs. 75,440/- under Rule 9(2) of the Central Excise Rules read with provisions to Section 11A(1) of the Central Excises and Salt Act, 1944 the Collector also imposed a penalty of Rs. 1 lakh on the appellants under Rule 173Q(1) of the Central Excise Rules, 1944. 3. On behalf of the appellants Shri P.S. Bedi, learned Consultant appeared before us. He stated that the Collector s findings are erroneous since M/s. Morgendew Laboratories in their capacity as loan licencee were eligible for exemption under Notification No. 175/86-C.E. in respect of P.P. medicines manufactured by them out of their own raw material and under their own supervision and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 2600/89-C has been filed by the appellants against the Collector s order dated 4th April, 1989 in which he has held that M/s. Morgendew Laboratories were only a trading firm who were not eligible for exemption under Notification No. 175/86-C.E. since they were not engaged in any manufacturing activity themselves. In this regard Shri Bhansali referred to the Collector s observation that Shri Gopal Mittal who was a partner in both the firms had admitted that M/s. Morgendew Laboratories could not set up their factory since they were issued only a provisional SSI certificate by the Director of Industries. He contended that M/s. Morgendew Laboratories could not be deemed as a loan licencee eligible for separate exemption in terms of Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their own labour or hired labour under their own supervision in SSI factory and for that purpose, they take on lease or hire the shift or shifts therein during any financial year, para 7 of the Notification No. 175/86-C.E. will not apply and such loan licencee would be eligible for grant of exemption under the said notification. Relevant extracts from para 14 of the said judgment are reproduced below :- 14. Point No. 3 :- Once it is held that the entire notification operates of its own and all the paras have to be given their proper effect, the next question that arises is - as to whether the loan licensees are covered by the sweep of that notification. The authority viz. Assistant Collector has taken the view that though loan licensees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rade, such specified goods shall, not merely by reason of that fact, be deemed to have been manufactured by such other manufacturer or trade. We fail to appreciate how the aforesaid provisions exclude loan licensees from the sweep of the said notification so far as para 7 is concerned, it would not apply to a case where a loan licensee who brings his own raw material to SSI factory and gets his goods manufactured by hiring labour but under his own supervision and who affixes his own marks of brand name or trade name, for the simple reason that para 7 would apply to a case where one manufacturer affixes on the specified goods, manufactured by him with brand name or trade name of somebody else. The case of the petitioners is that loan license ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat Morgendew Laboratories were issued a loan licence by the Drug Controller for manufacture of P.P. medicine in the appellants factory. In his affidavit Shri Gopal Mittal has further stated that M/s. Morgendew Laboratories were manufacturing liquid medicines and protein product in their own premises but for producing tablets they were using the appellants premises as a loan licensee by paying hiring charges per unit medicine produced since they did not have the machinery for producing tablet. He has also stated that P.P. medicine produced by Morgendew Laboratories at the appellants factory were made out of their own raw material and under their own supervision. Shri Gopal Mittal has referred to the copy of the trading account of Aldoc P ..... X X X X Extracts X X X X X X X X Extracts X X X X
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