1996 (6) TMI 243 - AT - Central Excise

Manufacturers' Operations Determine Goods' Origin. Brand Affixation Key for Exemption Denial.

The Tribunal held that the appellants were the manufacturers of the goods based on the nature of their operations and independence from the raw material ... Castings - Excisable goods - Marketability - Manufacturer Issues:1. Whether the items manufactured in the appellants' unit are goods for the purpose of levy of Central Excise duty.2. Whether the appellants can be held as the manufacturers of the goods when they manufacture goods out of raw materials supplied by another entity within the licensed premises of that entity.Analysis:1. The lower authority held that the appellants were manufacturers as the goods emerged in their hands and carried the brand name of the raw material supplier. The appellants argued that their operations did not amount to manufacturing and the plastic components were not marketable. They also claimed exemption under a specific notification. Citing various judgments, the appellants contended that drilling holes did not constitute manufacturing. They also argued that affixing the brand name did not apply as it was already on the castings received. The demand being time-barred was not raised earlier.2. The Department argued that the appellants were independent and functioning on a principal-to-principal basis with the raw material supplier. They cited Supreme Court judgments to support their stance. They claimed that the operations carried out transformed the castings into identifiable parts of the horn. The cones manufactured were meant for fitment and easily replaceable, making them marketable. The Department asserted that the goods were chargeable to duty.3. The Tribunal considered both sides' arguments. It found that the operations carried out by the appellants transformed the castings into an identifiable finished product, the horn body. The character of the product changed, and a new product emerged. The horn cone was also considered a marketable product. The Tribunal held that the appellants were the manufacturers of the goods based on the nature of their operations and independence from the raw material supplier.4. Regarding the affixation of the brand name, the appellants argued that they did not affix it as it was already on the castings received. The Tribunal found no contrary evidence from the Revenue and allowed the appellants' plea regarding the denial of exemption under a specific notification. Consequently, the appeal was decided in favor of the appellants.