TaxTMI 
TaxTMI 
1987 (7) TMI 100
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....ter it was discontinued in March 1981. Thereafter from time to time the models have been changed. The petitioners say that they started manufacturing the aforesaid two-band transistor radios for the third respondent and the latter used to supply to the first petitioner certain components on consignment basis for the manufacture of the said transistor radios ordered by them from time to time. The quantity and value of these components supplied by the third respondent to the first petitioner diminished and as on the date of the petition only a few components of approximately Rs. 14/- per radio in value were being sent by the third respondent to the first petitioner for the manufacture of the said two-band transistor radios. In the case of the single-band transistor radios, no components whatsoever were received from the third respondent. 2. The petitioners further say that the said factory at Thane is owned entirely by the first petitioner company and the workmen employed by them are the servants of the first petitioner company. They further say that the land and factory and the entire plant and machinery belongs to the first petitioner company. The manufacturing activity in the s....
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....d transistor radios manufactured by the first petitioner fall for classification and assessment of excise duty under Item No. 33-A(2) of the first schedule to the said Act. In exercise of its powers under Rule 8(1) of the Central Excise Rules, 1944, the first respondent issued Notification No. 208/77 dated July 2, 1977 exempting radios, including transistor sets, falling under Item No. 33-A(2) of the first schedule to the said Act of a value of not exceeding Rs. 165/- per set from the whole of the duty of excise leviable thereon, provided that the sets are manufactured in an industrial unit in respect of which a Central Excise Officer is satisfied that the sum total of the value of the capital investment made from time to time on plant and machinery is not more than Rs. 10 lakhs. 6. The petitioners say that the said transistor radios manufactured by them were being sold to the third respondent at Rs. 28.80 per set. As stated above, some of the components were supplied by the third respondent. However, the value of each set always remained well below Rs. 165/-. Further, the capital investment of the first petitioner on plant and machinery was under Rs. 10 lakhs. The petitioners, ....
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.... on behalf of M/s. Peico Electronics & Electricals Ltd." The petitioners immediately by a letter dated September 23, 1979, with a view to avoid misunderstanding and with a view to clarify, informed the Assistant Collector of Central Excise that it is not quite correct to say that the petitioners manufacture on behalf of M/s. Peico Electronics & Electricals Ltd. They also stated that they themselves are the manufacturers of those items some of which are sold to M/s. Peico Electronics and Electricals Ltd. and that they only affix their brand name thereon. Thereupon a show cause notice dated October 8, 1980 was issued to the petitioners. The said notice pointed out that the petitioners have contravened the provisions of Rule 9(1)(a) and 9(1)(c) of the Central Excise Rules, 1944 inasmuch as the petitioners have availed of exemption in terms of Notification No. 208/77 C.E. dated July 2, 1977 by filing wrong declaration and furnishing false information in respect of Philips two band radio Model No. 15 RL 254 and two band radio Model No. 15 AL 262. The notice further stated that the petitioners "undertake the jobwork of manufacturing" of the said two band transistor radios under the brand....
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....Model No. 15 RL 252 and No. 15 AL 262 manufactured by M/s. Asha Pavro Electronics Pvt. Ltd. bear 'PHILLIPS' trade mark which is registered in the name of M/s. Peico Electronics. 2) The product comes into market as if it is manufactured by M/s. Peico Electronics & Electricals Ltd. 3) The entire production of two band radio models are exclusively supplied by M/s. Peico Electronics & Electricals Ltd. 4) M/s. Asha Pavro have no interest in the commercial sale of the products in question. The above facts necessarily lead to the inescapable inference that M/s. Peico Electronics & Electricals Ltd. have engaged in the production of two band radio models through M/s. Asha Pavro Electronics Pvt. Ltd. on their own account." It is this order which is under challenge in this petition under Article 226 of the Constitution of India. 9. Mr. Setalvad, appearing for the petitioners has submitted that the reasons given by the Assistant Collector when he passed the said order are all patently wrong and contrary to well established principles. He submitted that the order indicat....
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....he trade marks of the buyer, are to be affixed on those goods only which are found to conform to the specifications or standards stipulated by the buyer. All goods not approved by the buyer cannot bear those trade marks and are disposed of by the sellers without the advantage of those trade marks. The trade marks are affixed only after the goods have been approved by the buyer for sale by the seller to the buyer. The seller owns the plant and machinery, the raw material and the labour and manufactures the goods and under the agreements, affixes the trade marks on the goods. The goods are manufactured by the seller on its own account and the seller sells the goods with the trade marks affixed on them to the buyer." 10. Mr. Setalvad also drew my attention to another case of the Supreme Court being the case of Jt. Secretary to Govt. of India v. Food Specialities Ltd., reported in (1985) 4 Supreme Courts cases 516 = 1985 (22)-E.L.T. 324 (S.C.), wherein the Supreme Court was considering a contention that the goods were manufactured by the respondents therein according to the specifications supplied by another concern M/s. Nestles and trade mark was affixed on the goods so supplied....
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...., if they have shown interest in assisting the petitioners in any manner that cannot be construed otherwise. 12. From the facts placed before this Court it is clear that the petitioners are an independent concern and they sell the material to the third respondents and if that is so, the entire basis of the order must necessarily be held to be bad in law. 13. Mr. R.V. Desai, appearing for the respondents, drew my attention to the case of Shree Agency v. S.K. Bhattacharjee, reported in 1977 E.L.T. (J 168), to contend that if raw material was supplied by the third respondent that should be considered as a criterion for the purpose of holding that the petitioners were manufacturing for and on behalf of the third respondent. In the case referred to above and relied on by Mr. Desai, the Court had clearly come to the conclusion that there was no actual sale of cloth at all by the weavers to the appellant and the cloth was woven by the weavers at the instance of the appellant. The Court as also the excise department came to the conclusion that the yarns were issued to the powerloom weavers not on credit, but for getting the same back duly woven by them into cloth and weekly payments ....