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TMI Blog1997 (3) TMI 208X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, who after making the goods, returned it to M/s. Automatic Electric Ltd. Therefore, the Asstt. Collector had demanded duty of Rs. one lakh on the electric motors cleared from 1-4-1979 valued at Rs. 5 lakhs. 2. The Collector (Appeals) on careful consideration of the matter held that the assessee and M/s. Automatic Electric Ltd. are independent units and that M/s. Automatic Electric Ltd. is not a dummy unit of the assessee. He has held that M/s. Automatic Electric Ltd. were getting the goods manufactured on job work basis by supplying raw materials and therefore, the assessee is an independent manufacturer. Ld. Collector has also held that there is no flow-back between the assessee and M/s. Automatic Electric Ltd. and the department had not made out any allegation of flow back for clubbing the clearances of both the units. In that view of the matter, he has held that the assessee is entitled to clear the goods in terms of Notification No. 71/78. He has also noted that the assessee is crossing the limit of Rs. 5 lakhs they had been paying duty on the next clearances. He has also held that demands are hit by limitation as no allegation of suppression has been made in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given by the ld. Collector. In that view of the matter, there is no ground to interfere with the well considered judgment of the Collector (Appeals). Therefore, we reject this appeal. (Sd/-) (S.L.Peeran) Member (J), Dated 29-2-1996 [Order per : S.K. Bhatnagar, Vice President]. - With due respects to the ld. Judicial Member, my views and orders are as follows : 4. In this case the ld. DR has stated that the respondents are the manufacturers of electric motors falling under TI 30. They also manufactured certain goods for and on behalf of M/s. Automatic Electric Ltd., Bombay on their supply of raw materials and on payment of labour charges, only by the latter. 5. They were availing exemption Notification No. 71/78 on the basis of their declaration. On verification, it was noticed that the goods belonged to M/s. Automatic Electric Ltd., and if their clearance was taken into account, the exemption Notification No. 71/78 was not admissible. Therefore, the Assistant Collector issued a show cause notice alleging inter alia the suppression of facts. 6. In reply to the show cause notice, the respondents admitted that they were manufacturing goods for M/s. Automatic Electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor (Appeals) has rightly relied upon the Madras High Court judgment and other cases cited by them and the case of Shri Agency was distinguishable. 13. I observe that Ld. DR s submissions have a lot of force. He is right in pointing out that the department has not alleged that the respondents were dummy unit but specifically charged them with suppression of facts relating to goods manufactured by them for and on behalf of M/s. Automatic Ltd. In my opinion the department also is right to the extent that the manufacturing company need not be a dummy company in such cases; but what is required to be seen is who is the real manufacturer. 14. In the present case the admission by the respondents that they were also engaged in label printing and assembly of electrical measuring instruments on labour charge basis and the confirmation by M/s. Automatic Electric Ltd. in their letter of 27-8-1980 that the respondents were manufacturing electric motors on their behalf is significant. It is equally significant that the respondents have not contradicted the allegation that this fact was not disclosed in the declaration filed by them. Therefore, the deptt. was entitled to invoke the extended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de. There is no discussion about this aspect either in the order of A.C. or in the order of the Collector (Appeals) and the position was also not clarified during the hearing. It is important to note that an exemption can only be claimed by a person who is eligible and entitled for the same. As per the General Scheme of the Act and the Rules, as well as Notification No. 71/78, the exemption could be claimed only by a person (manufacturer) only in r/o specified goods manufactured by him, or on his behalf. Therefore, exemption, if any due, could be claimed and allowed or disallowed depending upon the fulfilment or otherwise of the conditions mentioned therein only by M/s. Automatic Electric Ltd. and not by the respondents in r/o the goods manufactured on behalf of the former. There is yet another complication that the respondents have in their letter dated 18-4-1980 stated that labour jobs or label printing is carried out in their establishment at Bombay whereas assembly of electrical measuring instrument was carried out in Shed. No. 3, Lonavala Industrial Estate, Nagargaon. Therefore, the position was required to be examined factory by factory manufacturer by manufacturer, and ite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordance with law. (Sd/-) (S.K. Bhatnagar) Vice President dated 23-9-1996 20. In view of the difference of opinion between Hon. Member (J) and the Vice President the matter is submitted to the Hon. President for reference to a third Member on the following point :- Whether the appeal is requried to be rejected in view of the observations and findings of Member (J) or the matter is required to be remanded in view of the observations of the Vice President ? (Sd/-) (S.L. Peeran) Member (J) dated 24-9-1996 (Sd/-) (S.K. Bhatnagar) Vice President dated 24-9-1996 21. [Order per : Justice U.L. Bhat, President]. - Respondent is absent in spite of notice of hearing. I have heard Shri M. Jayaraman, JDR for the Revenue. 22. The appeal was heard by a Bench consisting of Shri S.K. Bhatnagar, Vice President and Shri S.L. Peeran, Member Judicial on 9-2-1996. I find an order signed by the Member Judicial on 29-2-1996 dismissing the appeal and an order signed by the Vice President on 24-9-1996, setting aside the impugned orders and remanding the case to the Assistant Collector for reconsideration in accordance with law. The two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , since the job worker was independent of AEL. The Collector (Appeals) held that the show cause notice did not contain any allegation of suppression and therefore, the notice was barred by limitation, that since there was no allegation that AEL was set up as a dummy company, the appellant before him must be treated different from AEL and the value of the manufactured goods in the hands of the job worker should be taken into consideration and not the price at which AEL was selling the goods and since value of clearances on that basis for the previous year would be less than Rs. 15 lakhs, the appellant before him would be entitled to the benefit of the notification. This order is challenged before the Tribunal. 25. The Member Judicial indicated that the Revenue has failed to make out justification for clubbing clearances of one independent unit with the clearances of another unit, that there was no nexus in terms of flow back, that there was no allegation that either of the units was dummy for the other, that the job worker being an independent manufacturer must be treated as manufacturer for the purpose of central excise duty, that the demand was barred by time as there was no all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the order proposed by the Member Judicial, as I find that the allegation of suppression of facts made in the show cause notice was not dealt with by either of the lower authorities and the Collector (Appeals) erroneously proceeded on the basis that the show cause notice did not contain any such allegation. 29. However, the gordian knot has to be cut in this appeal which can be done by looking at the matter on the basis of the facts of the case. Shri M. Jayaraman, JDR pointed out the relevant data with reference to two letters dated 24-5-1979 of the respondent and letter dated 8-8-1990 of AEL addressed to the Assistant Collector. Respondent did not furnish separately assessable value of electrical measuring instruments taking the view that they fall under T.I. 68. Letter dated 24-5-1979 disclosed the respondent s value of clearances of electrical motors during the year 1978-79 to be Rs. 8,82,320.00. The letter dated 8-8-1980 of AEL shows the latter s value of clearances of electrical motors attributable to AEL to be Rs. 7,01,600.00 and the value of item 28A goods to be Rs. 3,90,338.10. The letter also shows the value of T.I. 68 items to be Rs. 6,92,97,516.79. 30. Clause (a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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