ASHOK LEYLAND LIMITED Vs. COLLECTOR OF CENTRAL EXCISE

JUDGEMENT

(1.) THE petitioner challenges an Order of the first respondent passed in CW/52/13/4/82-CX ADJ. I dated 11-9-1984.

(2.) THE petitioner is a Company incorporated under the companies Act and engaged in the business of manufacture of heavy duty motor vehicles and industrial and marine engines. In the course of its business, the petitioner utilises manufacturing capacities of automobile ancillary industries in accordance with recognised practice of the trade and in accordance with the policy of the Government of India to encourage such small scale industries. In that way, the petitioner had entrusted to the second respondent certain job works by supplying raw materials to the second respondent. After receiving the finished/semi finished articles from the second respondent, the petitioner used the same in the course of manufacture of its excisable goods which it then clears after payment of appropriate excise duty. THE controversy is, whether the petitioner is to be treated as'manufacturer'under Section 2 (f) of the central Excise Act regarding the goods received from the second respondent or the second respondent is to be treated as'manufacturer'of those goods. THE second respondent is an independent legal entity and it does similar job works for other industries like Brakes India, Sundaram Clayton, etc. It is stated in the affidavit filed in support of the writ petition that an identical issue arose in the year 1981, and, after the petitioner explained the position, the excise Department treated only the second respondent or similar job worker as 'manufacturer'and not the petitioner. However, the petitioner received a show-cause notice dated 1-6-1983 , calling upon it to show cause why it (petitioner) should not be treated as manufacturer of ancillary goods such as studs, locking bolts, plugs, specian pins, etc. on the basis that the petitioner supplied raw materials to the second respondent for the manufacture of the abovesaid ancillary goods. According to the Revenue, in view of the inclusive definition of'manufacture' under Section 2 (f) of the Central Excises and Salt Act, (hereinafter referred to as'the Act'), the petitioner is the'manufacturer'of those ancillary goods. THE show cause notice further accused the petitioner for not taking out a Central Excise licence for manufacture of those items, etc. THE petitioner sent a detailed reply on 15-7-1983 bringing to the notice of the first respondent about the earlier stand taken by the Department and also several judgments of various High Courts on this aspect. A supplementary reply was also sent on 28-11-1983. THE first respondent, overruling the objections raised in the reply to the show cause notice, by order dated 11-9-1984, received by the petitioner on 28-11-1984, held that the petitioner was the'manufacturer'and accordingly liable to pay a duty of Rs. 5, 54, 841. 86. P.

(3.) I have considered the rival-submissions.