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TMI Blog2018 (12) TMI 1771X X X X Extracts X X X X X X X X Extracts X X X X ..... on of which, the goods do not become marketable, since they cannot be supplied to the customers. The definition of the term Manufacture in section 2 (f) includes any process which is ancillary or incidental to the completion of the manufactured product. Revenue has sought to sustain the view that the assessee is the manufacturer with the submission that they have engaged the job workers, supplied the raw material and supervised the activities there and hence, are to be considered as the manufacturer. Even though, the idea is attractive, it does not merit acceptance. The transformation of the raw material into the final product has been done by the job worker at his premises and hence, the job worker alone is to be considered as the manufacturer and the liability to payment of Excise Duty would be upon him. The assessees cannot be considered as manufacturers of the goods supplied to Railway Wagon manufacturers as well as Electricity Boards. The respective job workers who have manufactured the goods will be liable to payment of Excise Duty. In this view, there are no infirmity in the order passed by the Commissioner dated 30/11/2012 and hence, it is sustained and all the reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cessary components were got manufactured as per the specifications of Railway Wagon manufacturers/Electricity Boards. The activity happening at the job workers were supervised by the representatives of the assessee and after the satisfactory completion of manufacture of such goods at the premises of the job workers, these goods were transferred to the assesse s factories. Subsequently, at the assesse s factory, the goods were subjected to inspection by Third Party Inspection Agency approved by Railway or respective Electricity Boards. On completion of process as above, the goods were finally supplied to Railway Wagon manufacturers/Electricity Boards under the invoices of the assessee. 6. The department investigated into the practices adopted by the assessee noticed significantly that: (i) No Excise Duty was being paid by the assessees on the supply of goods made to Electricity Board/Railway Wagon Manufacturers. (ii) For the activity happening at the premises of the job workers, such job workers were being paid only labour charges in addition to supply of the necessary raw materials; but no Central Excise Duty was being paid by the respective job workers. (iii) On sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 04/06/2008 issued for clearance made to Electricity Board was decided by the Adjudicating Authority by issue of impugned order dated 23/01/2009 in which he confirmed the proposal of demand for Central Excise Duty as well as penalties. This order is challenged by the assessee and their directors by way of appeals No. E/199-201/2009. 12. We heard Shri B. N. Chattopadhyay, Ld. Consultant on behalf of the assessee and their directors of Shri Vivek Mohta and D. K. Mohta. He argued the case mainly on the following points:- (I) It is not disputed by them that the assesses have procured raw materials, sent them to various job workers and got the goods manufactured as per the specification of Railway Wagon manufacturers as well as Electricity Boards. He further admitted that the job workers were paid to the job charges and further no Excise Duty was paid by the job workers. However, he strongly denied the view taken by Revenue that the assessee was liable to payment of Central Excise Duty on the goods supplied to Railways/Electricity Boards. In this connection, it was submitted that no activity of manufacture was done in the assessee s factory. Only the process of mandatory ins ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayment of labour charges, and got the goods manufactured is to be reconsidered as the manufacturer. (ii) Above proposition gets support from the fact that the assesses have claimed themselves to be the manufacturers before the Railways as well as Electricity Boards. They have obtained contracts from these Agencies for supply of goods and the goods supplied by them also bore their mark which establishes a connection between the goods and the assessee. (iii) He also referred to the fact that the assesses have purchased raw materials and claimed the credit of the VAT paid on such raw materials. After the goods have been manufactured and received back from the job workers, the final products has been cleared after payment of VAT, by making use of the input tax credit of VAT. This clearly establishes the fact that the goods have been manufactured only by the assessee and sold by them to Railways/Electricity Boards. (iv) He subsequently emphasized on the process of mandatory inspection carried out by third party agency in the assessee s premises. He brought our attention to their record of inspection which is part of the appeal papers. He also emphasized that without the comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and not merely producing some change in a substance. The Apex Court has further held that Manufacture implies a change, but every change is not manufacture and yet every change of article is to the result of treatment, labour and manipulation. But something more is necessary and there must be transformation; a new and different article must emerge having a distinctive name, character or use. It is not difficult to see that at the premises of the job worker, the raw material has been transformed into the required components. As such, it is safe to conclude that manufacture of the goods has taken place at the premises of the job worker. But the fact remains that the goods are required to undergo a further process in the form of inspection before supply to the customer. It is on record that only the process of inspection has been carried out in the premises of the assessee. In the chain of activities, from raw material to the supply of goods to customers, the process of inspection becomes one of the processes. No doubt, it is a process incidentally or ancillary to the completion of the manufactured product and such process, the marketability of the goods is not complete. But it can ..... X X X X Extracts X X X X X X X X Extracts X X X X
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