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TMI Blog2014 (8) TMI 1047X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Further, in any event, penalty is not sustainable in view of the Hon’ble Delhi High Court judgment in Pioneer Silk Mills P. Ltd. v. U.O.I. [1991 (9) TMI 93 - HIGH COURT OF DELHI ] [upheld by Hon’ble Supreme Court in 2003 (11) TMI 75 - SUPREME COURT OF INDIA ], as the demand is for additional duty of excise under Goods of Special Importance Act to which the penal provisions of Central Excise Act, 1944 were not applicable for the period prior to 13-5-1994. The major part of the period in the present case is prior to 13-5-1994. The search operations took place on 30-5-1994 and there is no separate quantification of the duty for the period 13-5-1994 to 30-5-1994. - Decided in favour of assessee - E/1422-1423/2006-Mum - Final Order Nos. A/117-118/2015-WZB/SMB - Dated:- 6-8-2014 - Shri Anil Choudhary, Member (J) Shri J.C. Patel, Advocate, for the Appellant. Shri S.G. Dewalwar, Addl. Commissioner (AR), for the Respondent. ORDER The appellants in Appeal No. E/1423/2006 filed by M/s. Sant Processors is proprietary concern of Mrs. Simi Ahuja. The other appellant, in Appeal No. E/1422/2006, Satinder Pal Singh Ahuja is husband of Mrs. Simi Ahuja. 2. The facts le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se for 50,000 mtrs.), (b) for production above 50,000 meters @ 5 paise. (iii) One month s conducting charges payable in advance. (iv) Licencee responsible for all liability including taxes, duties, compliance to statutory obligations etc. (v) Licencee to pay licensor for consumable used like gas/power etc., separately (vi) The licensor will permit Chandan Processors to use their Excise license, statutory license, BMC permit, etc. (vii) Effective possession of factory premises including all machinery handed over to Chandan Processors. 2.3 From 1-3-1994, Chandan Processors carried on the processing of grey fabrics in the said factory along with one K.N. Mehta of Ram Processors . The grey fabrics were received by Chandan Processors/Ram Processors from merchants who were customers of Chandan Processors/Ram Processors. 2.4 On 30-5-1994, acting on intelligence that the said Chandan Processors and Ram Processors were clearing processed fabrics clandestinely, Central Excise Officers visited the said factory premises. In the course of investigations which followed, the Central Excise officers recorded in June 1994, statements of Raju Lakhwani, proprietor of Chandan P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for duty against the appellants and imposed penalties on the appellants. In appeal against the said Order, the Tribunal by its Order dated l-3-2000 observed that the Commissioner had ignored and failed to discuss the evidence on record which suggested that the actual manufacturer s were Chandan Processors/Ram Processors and accordingly the Tribunal remanded the matter again with specific direction to the Commissioner to decide the following questions : (a) who actually was the manufacturer and conducted the processing, (b) who in fact received the grey fabrics and (c) who returned the grey fabrics after processing. 3.2 The Commissioner, vide Order dated 20-1-2006 which is the impugned in the present appeal, have once again confirmed the demand against the appellant and imposed penalties on the appellants. 3.3 The issue which arises for determination in the present appeals is who was the manufacturer of the fabrics, which had been processed and clandestinely cleared during the period September 1993 to May 1994 from the factory premises of Sant Processors. 3.4 By Order dated 1-3-2000, this Tribunal had specifically directed the Commissioner to decide the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chandan Processors/Ram Processors, and in the follow up investigations in the statements recorded by the department, Mr. Raju Lakhwani of Chandan Processors and Mr. K.N. Mehta of Ram processsors have admitted to such manufacture and clandestine clearance and undertaken to pay the duty. It is therefore surprising that instead of demanding duty from the said Chandan Processors/Ram Processors, the Notice proceeded to demand the duty from the appellants. 4.2 Merely because the factory was registered in the name of the appellants and the same was given on license by the appellants to the said Chandan Processors/Ram Processors for carrying out the manufacturing activity, that in law would not make the appellants liable for payment of duty on the goods manufactured by the said Chandan Processors/Ram Processors. The appellant had licensed their factory to Chandan Processors, who manufactured the goods on their own account using their own labour and materials. 4.3 As per Section 2(f) of the Central Excise Act, 1944, manufacturer includes not only a person who employs hired labour in the production and manufacture of excisable goods but also who engages in the production and manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had given the looms on leave and licence to the Petitioners were not the manufacturers and was it the Petitioners who were the manufacturers and since the Petitioners had not cleared the goods in accordance with the relevant Central Excise Rules, they were liable for the duty. The Hon ble Gujarat High Court in the case of Indica Laboratories P. Ltd. v. U.O.I. - 1990 (50) E.L.T. 210 (Guj.) has held that persons who take on licence, factory premises of another and carry on manufacture in such premises, taken on licence, are manufacturers within the meaning of Section 2(f) of the Central Excise Act, 1944. To the same effect is the decision of the Hon ble Calcutta High Court in the case of Kumar Jagdish Ch. Sinha v. CCE - 2000 (124) E.L.T. 118 (Cal.), in which the Hon ble High Court has held that the excise duty is recoverable from the lessee of the factory who actually manufactured the goods. 5. In view of the aforesaid legal position, considering the evidence on record, shows that the appellants had given their factory on license to Chandan Processors/Ram Processors, who were the actual manufacturers and who have during the investigations admitted to the manufacture and clearance ..... X X X X Extracts X X X X X X X X Extracts X X X X
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