Territorial jurisdiction and manufacturer status defeated excise demand where only component supply and technical supervision were shown.

Excise demand could not be sustained where the alleged manufacturing activity took place outside the Coimbatore Commissionerate's territorial jurisdiction, because the competent authority was the Commissioner having jurisdiction over the place where the goods came into existence. The appellants were also found not to be manufacturers, as they only supplied components and provided technical supervision while the textile mills carried out the actual erection and manufacture at their own premises with their own labour or contractors. On both grounds, the duty, penalty and interest demands were unsustainable.

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Issues: (i) Whether duty could be demanded by the Coimbatore Commissionerate in respect of manufacturing activity alleged to have been carried out outside its territorial jurisdiction. (ii) Whether the appellants were the manufacturers of the industrial fans and liable to duty, penalty and interest.

Issue (i): Whether duty could be demanded by the Coimbatore Commissionerate in respect of manufacturing activity alleged to have been carried out outside its territorial jurisdiction.

Analysis: The jurisdictional report accepted that demands could not be raised for manufacturing activity carried out outside the Commissionerate. The goods, if any, came into existence at the buyers' premises, and the competent authority would be the Commissioner having jurisdiction over those premises. The demand, to that extent, could not be sustained against the appellants by the Coimbatore Commissionerate.

Conclusion: The demand for activity carried out outside the Coimbatore Commissionerate's jurisdiction was unsustainable and this issue was decided in favour of the assessee.

Issue (ii): Whether the appellants were the manufacturers of the industrial fans and liable to duty, penalty and interest.

Analysis: The evidence showed that the appellants were only design and marketing engineers who supplied components and deputed engineers for technical supervision. The actual erection activity was carried out by the textile mills in their own premises, with their own labour or engineering contractors, and the appellants did not carry on the manufacture on their own account or with their own factory infrastructure. On that footing, the appellants could not be treated as manufacturers within the meaning of the excise law.

Conclusion: The appellants were not the manufacturers and the duty, penalty and interest demands against them were unsustainable.

Final Conclusion: The impugned demand and penalty could not survive, as the proceedings were unsustainable both on territorial jurisdiction and on the finding that the appellants were manufacturers.

Ratio Decidendi: A person who merely supplies components and renders technical supervision, while the actual erection and manufacture are carried out by another party at its own premises, is not the manufacturer for excise purposes, and a demand cannot be sustained by a Commissionerate lacking territorial jurisdiction over the place of manufacture.

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