TaxTMI 
TaxTMI 
1991 (6) TMI 149
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.... 1-4-1985 they filed a classification list for the year 1985-86 claiming exemption under Notification No. 85/85. They also filed a declaration that during the year 1985-86 their clearances would not be in excess of Rs. 75 lacs. On 22-10-1985, the Supdt. of Central Excise issued a show cause notice asking the appellants to show cause as to why an amount of Rs. 2,33,859.47 should not be recovered from them. The show cause notice alleged that the appellants were not eligible for exemption under Notification No. 85/85 since the aggregate value of their clearances including the goods acquired by them as a loan licensee from M/s. Natco Fine Pharmaceuticals Private Limited had exceeded the limit of Rs. 75 lacs. In his order dated 29-10-1986, the A....
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....e only clearance from a factory. He argued that as M/s. Natco Fine Pharmaceuticals Pvt. Ltd. was an independent Company duly licensed to manufacture Patent and Proprietary Medicines and the department had not led any evidence that they were dummy or camouflage of the appellants. He contended that under these circumstances, there could be no question of adding the value of the goods manufactured by M/s. Natco Fine Pharmaceuticals Pvt. Ltd. out of raw material supplied by the appellants as loan licensee, to the value of the goods actually manufactured by the appellants in their own factory for the purpose of Notification No. 85/85. 4. Shri Dev stated that the value of the goods manufactured and cleared by the appellants from their own fact....
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....ensee they were also supplying raw materials for getting certain goods manufactured by M/s. Natco Fine Pharmaceuticals Pvt. Ltd. The short point that arises for determination in this case is whether the value of the goods manufactured by M/s. Natco Fine Pharmaceuticals Pvt. Ltd. out of raw materials supplied by the appellants as a loan licensee could be deemed as goods having been manufactured on behalf of the appellants for being added to the value of the goods cleared by the appellants from their own factory during any financial year for computation of the overall limit of Rs. 75 lacs for the purpose of exemption under Notification No. 85/85. In this regard it is seen that the question whether the goods manufactured by a licensee out of r....
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....ensee getting his goods manufactured out of his raw materials at a factory belonging to someone else could be deemed as a manufacturer has held in the case of True Chem Pharma (Pvt.) Ltd. v. Collr. of C. Ex. reported in 1991 (56) E.L.T. 690 (Tri.) = 1990 (17) E.L.T. 753[ii] that a loan licensee cannot be deemed as a manufacturer unless it can be established that he carries out the manufacturing activity out of his own raw material under his own supervision by hiring the factory premises and equipment shift-wise or otherwise. The relevant extract from this decision is reproduced below: "12. In the light of the above discussion the only issue which remains to be examined is whether the demand for recovery of short levy issued to the appell....