2002 (2) TMI 166 - AT - Central Excise

Appeal success: Assembly not equal to manufacturing under Central Excise Act.

The Tribunal allowed the appeal by M/s. Kartik Telecomptrols (P) Ltd., ruling that they were not the manufacturers of D.P. Boxes and therefore not liable ... Manufacturer Issues involved:- Whether the appellants are the manufacturer of D.P. Boxes and liable to discharge duty liability under the Central Excise Act and Rules.Detailed Analysis:The appeal in question pertains to M/s. Kartik Telecomptrols (P) Ltd. and centers around the issue of whether they qualify as manufacturers of D.P. Boxes and are thus responsible for discharging duty liability as per the Central Excise Act and Rules. The appellant, represented by Shri J.S. Agrawal, argued that they were merely entrepreneurs without a factory, power connection, machinery, labor, or staff. They received purchase orders for D.P. Boxes/casing with mounting plates from M/s. Telecommunication Consultants India Ltd. and M/s. M.T.N.L. The appellant entered into an agreement with M/s. Salwan Plastomers for the manufacture of D.P. Boxes using raw materials supplied by them. Quality control was conducted at the job worker's factory, who was registered with the Central Excise Department. Disputes arose with the job worker, leading to complaints and the subsequent demand for excise duty by the Deputy Commissioner. The Commissioner (Appeals) rejected their appeal, alleging that the appellants were indeed the manufacturers of D.P. Boxes based on various premises, including the shared address with the job worker.The learned Advocate further contended that the appellants did not manufacture the D.P. Boxes as they lacked a factory, labor, and machinery. Complete casings were supplied by M/s. Salwan Plastomers, and charges for casing assembly were reflected in the bills issued by the job worker. The appellant's address differed from that of the job worker, as evidenced by the bills. Referring to legal precedents such as O.R.G. Systems v. CCE, Vadodara, it was argued that merely supplying raw materials does not constitute manufacturing. Additional reliance was placed on decisions like Fort Gloster Industries Ltd. v. CCE, Calcutta-II, and Bhilwara Spinners Ltd. v. CCE, Jaipur, to support the argument that assembly of duty-paid parts does not amount to manufacturing. The decision in CCE, Baroda v. M.M. Khambhatwala was also cited.On the other side, Ms. Krishna Mishra, representing the Revenue, argued that the assembly of D.P. Boxes was carried out by the appellants themselves, with the job worker only handling the molding of certain components. Referring to the decision in M.J. Exports Pvt. Ltd. v. Collector of Customs, Bombay, it was contended that certain assembly activities do qualify as manufacturing. Additional reliance was placed on cases like Texmaco Ltd. v. CCE, Calcutta and Hansa Electronics (I) Pvt. Ltd. v. CCE, Mumbai-I to support this stance.After considering the arguments from both sides, the Tribunal delved into the crux of the matter. Central Excise duty is levied on goods that are produced or manufactured, necessitating duty payment by the actual manufacturer. Citing legal precedents, the Tribunal emphasized that the supplier of raw materials does not automatically qualify as the manufacturer. While the Revenue heavily relied on the statement of the job worker, Mr. Kamal Sharma, alleging that the appellants assembled the D.P. Boxes, the Tribunal found this evidence lacking corroboration. The appellants' contention that complete casings were supplied by M/s. Salwan Plastomers and the packing was handled by the job workers was supported by bills mentioning 'D.P. Box casing assembly work (Job Work only) material supplied by KPPL' and 'D.P. Box casing (Job work only) Material supplied by KTPL.' Given the lack of concrete evidence and the failure to establish that the appellants conducted the assembly, the Tribunal allowed the appeal.