1993 (6) TMI 86 - HC - Central Excise

Petitioner not manufacturer under Section 2(f) of Central Excise Act

The court held that the petitioner could not be considered the manufacturer under Section 2(f) of the Central Excise Act. The writ petition was allowed, ... Manufacturer Issues Involved:1. Whether the petitioner or the second respondent should be treated as the 'manufacturer' under Section 2(f) of the Central Excise Act.2. Validity of the show-cause notice and the subsequent order passed by the first respondent.3. Applicability of earlier judgments and precedents to the present case.Issue-Wise Detailed Analysis:1. Whether the petitioner or the second respondent should be treated as the 'manufacturer' under Section 2(f) of the Central Excise Act:The primary issue revolves around the interpretation of the term 'manufacturer' as defined under Section 2(f) of the Central Excise Act. The petitioner, a company engaged in manufacturing heavy-duty motor vehicles and engines, supplied raw materials to the second respondent for job work. The finished/semi-finished articles were then used by the petitioner in its manufacturing process. The first respondent argued that the petitioner should be considered the 'manufacturer' because it supplied the raw materials and received the finished goods. However, the petitioner contended that the second respondent, an independent legal entity performing similar job works for other companies, should be regarded as the 'manufacturer.'2. Validity of the show-cause notice and the subsequent order passed by the first respondent:The petitioner received a show-cause notice on 1-6-1983, questioning why it should not be treated as a manufacturer of ancillary goods, and was subsequently ordered to pay a duty of Rs. 5,54,841.86. The petitioner argued that this position contradicted earlier departmental stands and judicial precedents. The first respondent, however, maintained that the inclusive definition of 'manufacture' under Section 2(f) justified treating the petitioner as the manufacturer. The petitioner sought judicial review under Article 226 of the Constitution, citing apparent errors and disregard for precedents by the first respondent.3. Applicability of earlier judgments and precedents to the present case:The petitioner relied heavily on several judgments, including those of the Supreme Court and various High Courts, to argue that job workers like the second respondent should be considered manufacturers. Notable cases cited included Ujagar Prints v. Union of India, P.M. Abdul Latif v. Assistant Collector of Central Excise, and Andhra Re-rolling Works v. Collector of Central Excise. These cases generally supported the view that job workers could be treated as manufacturers under Section 2(f). Conversely, the first respondent relied on the Supreme Court's decision in Shree Agency v. S.K. Bhattacharjee, which was distinguished by the Gujarat High Court in Prolite Engineering Co. v. Union of India, stating that the facts of Shree Agency were unique and not generally applicable.Judgment Analysis:The court examined the applicability of the Supreme Court's decision in Shree Agency and found it distinguishable based on the facts of the present case. The Gujarat High Court's interpretation in Prolite Engineering Co. was endorsed, emphasizing that the second respondent was an independent entity and the arrangement was genuine.Further, the court reviewed the relevant judgments cited by the petitioner. In Ujagar Prints, the Supreme Court clarified that duties of excise are imposed on the production or manufacture of goods, independent of ownership. In P.M. Abdul Latif, a Division Bench of the Madras High Court held that job workers are manufacturers under Section 2(f). Similar views were expressed in Andhra Re-rolling Works and other cases, consistently supporting the petitioner's stance.The court concluded that the petitioner could not be considered a 'manufacturer' under Section 2(f) based on the facts and circumstances, and thus, the levy of duty on goods manufactured by the second respondent was unwarranted.Conclusion:The writ petition was allowed, and the impugned order of the first respondent was quashed. The court held that the petitioner could not be considered the manufacturer under Section 2(f) of the Central Excise Act, and no costs were ordered.