TaxTMI 
TaxTMI 
2004 (2) TMI 140
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.... Dowlaiswaram. Accordingly, M/s. SDP obtained Central Excise registration for manufacture of different varieties of ENO. M/s. SDP filed declaration under Rule 173B of Central Excise Rules classifying ENO under sub-heading No. 3003.10 of Central Excise Tariff Act and price declaration under Rule 173C of Central Excise Rules declaring the assessable value based on the cost of the raw material plus conversion charges and manufacturing profit in accordance with the principles laid down by the Supreme Court in the Ujagar Prints case. In their declaration, for marketing pattern it was mentioned that the ENO fruit salt, which attracts CED on clearance from the factory is transferred to the godown of M/s. SBCH, Rajahmundry in terms of MOU. The Central Excise officers of Rajahmundry investigated the valuation adopted by SDP for payment of duty and in the course of investigation, they came to the conclusion that M/s. SBAL, the principal and M/s. SDP the so called job worker and M/s. Smithkline Beecham Consumer Healthcare Ltd. (hereinafter referred to as 'SBCH'), the so called consignment agent are related persons as per Sec. 4 of Central Excise Act. The assessable value arrived at by M/s. SD....
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....des charging interest under Sec. 11AB. He also imposed penalty of Rs. 5 lakhs each on M/s. SBCH under Rule 209A, Shri Raghavendra Rao, Managing Partner of M/s. SDP under Rule 209A. He also imposed penalty of Rs. 1 lakh each on Shri Nandan Das Gupta, Director, M/s. SBAL; Shri P.N. Haridas, Company Secretary, M/s. SBAL; Milan Chakravarthi, General Manager, M/s. SBCH and R. Seshadri, Manager (Accounts), M/s. SBCH under Rule 209A. 3.Shri G. Shivadass, Advocate appeared for the appellants and Smt. Radha Arun, ld. SDR appeared for the Revenue. 4.Shri Shivadass, the ld. Advocate for the appellants stated that M/s. SDP is a partnership firm with Shri K. Raghavendra Rao and Shri B. Laxman Prasad as the main partners. This firm was earlier in the name of M/s. Southern Packaging who were undertaking job work of repacking ENO fruit salt manufactured and supplied by M/s. SBCH into small sachets of 5 gms. Around July 1998, M/s. SBAL was on the look out for a contract manufacturer on job work basis who could manufacture ENO fruit salt. M/s. SDP offered to set up a factory for the said purpose and entered into an agreement in September 1998 for manufacture of ENO fruit salt in the manufactur....
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....sp; Knowhow and technical assistance to manufacture the product has been provided by SBAL. (c) Funds have been sanctioned to SDP by the financial institutions on the basis of MoU with SBAL and the underlying support of SBAL. (d) The entire project is tailor-made to manufacture ENO fruit salt. (e) SDP did not own any existing facilities and that all facilities were created pursuant to the MoU." 7.He pleaded that in the MoU between SDP and SBAL, the terms, rights & duties of the respective parties are set out. In the contract for manufacture, technical knowhow is invariably provided by the supplier of raw material. In the contract for manufacturing facility there would be tailormade manufacture of the particular product only. The entire funds were obtained by SDP for purchase of land, plant and machinery and interest on such finances is being given by SDP only. No financial guarantee or security was offered by M/s. SBAL. The entire land where the facility has come up belongs to the partner of SDP and machinery ha....
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....d and created by SDP out of their funds. In the case of Creative Cosmetics v. CCE reported in 1993 (63) E.L.T. 348, the Tribunal held that the Hon'ble High Court of Gujarat in the case of Indica Laboratories Pvt. Ltd. v. Union of India reported in 1990 (50) E.L.T. 210 has not decided as to who is the actual manufacturer. However, in the case of Nickson Pharmaceutical v. CCE, Mumbai [1998 (102) E.L.T. 223] and Mayo India Ltd. v. CCE, Aurangabad [1999 (113) E.L.T. 1036], the Tribunal has held that job worker is the actual manufacturer. In the present case that is from March 2000 to February 2001, the Department itself has been accepting SDP to be the manufacturer and monthly RT-12 returns were filed by M/s. SDP indicating clearances and payment of duty on such clearances. The Assistant Commissioner has also passed an order dtd. 20-8-2003 finalising the assessments of the clearances made by SDP and no show cause notice was issued to SBAL. On the same facts arising out of same MoU, Department cannot take two different stands at two different point of time. It cannot be that SDP would not be considered as manufacturer for the period from March 2000 to February 2001 and would be consider....
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....lays down that every manufacturer, trader or person hereinafter mentioned, shall be required to take out a licence and shall not, conduct his business in regard to such goods otherwise than by the authority, and the subject to the terms and conditions of a licence granted by a duly authorized officer in the proper form. When we turn to Rule 174A it provides that "not withstanding anything hereinbefore contained, if the Central Government is satisfied that it is necessary or expedient in the public interest so to do, it may by notification in the Official Gazette, and subject to such conditions or limitations as it may specify in such notification, exempt from the operation of Rule 174..."(b) any class of manufacturers who get their goods manufactured on their account from other person or persons"... The aforesaid procedure clearly postulates that for the purpose of the Excise Act and the rules, there can be a manufacturer who get his goods manufactured of his own account from other person or persons, meaning thereby, utilizing infrastructures of others. It is, therefore, obvious that such loan licensees who are entitled to manufacture PP medicines and who are having relevant licenc....
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....t interpreting provisions of Section 2(f) of the Act on the same lines. We do not deem it fit to burden this judgment by referring to them. In view of the aforesaid settled legal position and in the light of the provisions of the Central Excise Act and the Rules, it must be held that the loan licensees are also manufacturers within the meaning of the term as envisaged by the said Act and the Rules, and especially when they get their goods manufactured under their own control or supervision and out of their own raw material at the factory premises belonging to someone also and which premises they might have hired for the time being shiftwise or otherwise." Thus, it is clear that for the purpose of Central Excise Act and Rules, there can be manufacturer who gets his goods manufactured on his own account from other person or persons thereby utilizing infrastructure of others. It is therefore, obvious that such loan licencees who are entitled to manufacture PP medicines and who are having relevant licences under the Drugs and Cosmetics Act read with relevant rules, can utilize factory premises of other persons where they can get their goods manufactured under their own control and s....