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TMI Blog1995 (8) TMI 203X X X X Extracts X X X X X X X X Extracts X X X X ..... risedly involving central excise duty of Rs. 7,41,285.97. The origin of the case is that on 21-6-1985, the Central Excise Preventive Staff of the Delhi Collectorate visited the appellants premises when they found that they were getting carbon paper manufactured from different Parties in Delhi, namely, job workers referred to above. Shri Mukesh Gupta, Partner of the appellant co. in a statement given on that day, said that they were getting carbon paper manufactured from the above mentioned parties. Central Excise officers again visited the appellants premises on 26-6-1985 when Shri Mukesh Gupta furnished the details of raw-materials, namely, Base Paper and ink supplied to different parties during the year 1984-85 for getting the carbon paper manufactured from them as well as particulars of job charges paid to them. He stated that his firm is engaged in the manufacture of tele-printer rolls. They also get the carbon paper manufactured from the job workers against the raw-materials supplied. The department was of the view that since the appellants had purchased all the raw-materials themselves and supplied it to the different job workers for getting carbon paper manufactured on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fictitious unit. In the result, the Collector ordered that the appellants should pay duty of Rs. 7,41,285.97 in respect of the goods already cleared and also the goods seized during the proceeding, namely, 480 rolls of carbon paper. The seized goods were to be cleared on a fine of Rs. 50,000/- in lieu of confiscation. A penalty of Rs. 4 lakh on the appellants was imposed. 2. Shri J.S. Agarwal, ld. Counsel appearing for the appellants, submitted that the Principal Collector has erred in concluding that the job workers were dummies set up by the appellants. The Ld. Counsel referred to an Affidavit filed along with this appeal before the Tribunal dated 13-12-1986 from Sh. Jagdev Sharma, Pradhan, Village Panchayat, Samalkha in which it has been deposed that Shri Jagjit Singh was running a poultry farm in the name of M/s. Chatwal Poultry Farm and that in the same premises. Shri Jagjit Singh was also running a small unit where carbon paper was being manufactured. It is, further stated therein that following the riots in 1984, the factory had ceased to function as it was burnt down and occupants killed. The ld. Counsel, further, submitted that there is further evidence of payment made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cture carbon paper out of the raw-material supplied by the appellants, are the tools set up by the appellants as a device to avoid payment of excise duty as a manufacture of carbon paper. This is essentially a question of the status of the units which manufactured carbon paper for the appellants on job work basis. Taking up this aspect, it is found that the unit M/s. Chirag Enterprises (P) Ltd., as per the statement of its Managing Director, Sh. Rajiv Tandon, was engaged in the manufacture of paper gum tapes and they had undertaken the manufacturing of carbon paper on job work basis for the appellants from the raw-material supplied by the appellants. Therefore, it is clear that this unit had an independent existence and was engaged in production work on their own. Similarly, in the case of the unit, M/s. Precision Paper Products, it is also not solely existing for the purpose of making carbon paper for the appellants because the Sh. Gupta, partner of firm said that his firm engaged in the manufacture of computer stationery and carbon paper and they further produced carbon paper for their own use besides undertaking manufacture thereof for the appellants from the raw-materials suppl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In this sense also, the Principal Collector concludes that it can be said that the four units in this case are in reality acting only for the appellants having really to freedom to manufacture the goods on their own account because they were manufacturing the goods out of raw-material supplied by the appellants and were returning the product to them receiving only the labour charges. However, the case law has evolved in this respect over a period and it is now well settled that in order to show that the units are mere dummy, it should be established that raw-materials supplier exercises complete control over the production and manufacturing activity and also has financial link up with the flow back of finances between the units. There has been a detailed discussion on the case law on the subject on a more or less similar factual back ground in the majority decision of the Tribunal in the case of Fusion Polymers Ltd. v. Collector of Central Excise reported in 1991 (56) E.L.T. 665 (Tribunal) wherein the Tribunal had also considered the Supreme Court decision in the case of Shree Agency (supra). Para 32 of the majority decision is reproduced below :- 3.2. The scope of the term ..... X X X X Extracts X X X X X X X X Extracts X X X X
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