CC AND C Vs. GWALIOR CHEMICALS IND LTD.

JUDGEMENT

(1.) THE revenue has filed the present Appeal against Order -in -Appeal No. 138/2003 dated 31.3.03, by which the Commissioner (Appeals) has held that the Adjudicating Authority can not classify the goods under Heading different from Heading proposed under show cause notice and that M/s. Gwalior Chemical Industries Ltd., respondents, are not manufacturer merely because they supplied raw materials, design and specification of the furniture.

(2.) SHRI Kumar Santosh, learned Senior Departmental Representative, submitted that two show cause notices were issued to the respondents for classifying the furniture manufactured out of raw material supplied by the Respondents along with design and specification under Heading 94.01, 93.04 and 94.04 of the Schedule to the Central Excise Tariff act; that the Joint Commissioner under Adjudication Order No. 104 -105/99 dated 24.12.99 classified the furniture under Heading 94.03 of the Tariff and had confirmed the demand of duty and imposed penalty; that the Commissioner (Appeals) has held that the classification ordered by the Adjudicating Authority is beyond the show cause notice and is not sustainable relying upon the decision of the Tribunal in the cases of CCE vs Surya Jyoti Safety Products [, 1999 (147) ELT 367 ]. He contended that the ratio of the said decision is not applicable to the facts of the present matter in as much as there was no reference or proposal in the show cause notice issued in Surya Jyoti Safety Products case regarding change in the classification of the products manufactured by them; that in the present matter, show cause notices had been duly issued indicating the various headings of Chapter 94; that instead of classifying the product under Heading 94.01 or 94.04 of Chapter 94, the Joint Commissioner had classified the product under Heading 94.03 which applies to "other furniture and parts thereof"; that in the case of Chand Industries vs. CCE Delhi II { : 2001 (133) ELT 409 (Tri)}, wherein the contention was raised by the Appellants that the Adjudicating Authority had classified bobbins under sub Heading 39.26 90 where as on appeal the commissioner (Appeals) had classified them under sub heading 3923.90 in respect of which they were not put to notice, the Tribunal did not find any substance in the said contention on the ground that the dispute, from the beginning was whether the bobbin were classified as articles of plastic or parts of motorcycle and the bobbin were classified s articles of plastic. he further, submitted that the appellants are the manufacture of the furniture in question as all the manufacturing activities had been carried out in their premises under their active and strict control; that raw material was supplied by them; that drawing had also been supplied by them; that the quality of inputs was also determined by the respondents who were also to bear the loses, if any, at the ends of job workers.

(3.) WE have considered the submissions of both the sides. The duty has been demanded on the impugned goods from the respondents treating them as manufacturer. In our view the Appeal could be disposed of after considering the question as to whether the respondents who have supplied the material, design and space are the manufacturer or the job worker who actually fabricated the furniture are the manufacturer. It is settled law that the supplier of the raw material is not manufacturer. The person who actually manufactures the goods is a manufacturer for the purpose of levying the Central Excise duty. In the case of Pawan Biscuits Co. Pvt. Ltd relied upon by the learned Chartered Accountant, an agreement was entered into between the Appellants and Britannia industries Ltd. for manufacturing biscuits for britannia. the terms of agreement, broadly speaking, envisaged that the ingredients for the manufacture of biscuits as well as recipe or method by which the biscuits were to be manufactured, were to be supplied by britannia for the manufacture of biscuits. the Appellant were required to make packages as directed by Britannia and then supply the same under Britannia's instruction. The Supreme Court has held that the cost of the raw material supplied by britannia would have to be included in addition to the appellants manufacturing cost and profit in the assessable value. it is thus apparent that M/s. Pawan Biscuits were regarded as manufacturer despite the fact that the ingredients for the manufacture of the biscuit as well as the recipe were supplied by Britannia and the biscuits were packed as directed by britannia and supplied under their instructions. it has been also held by the Supreme Court in the case of Ujagar Prints Vs Union of India,, 2002 -Taxindiaonline -02 -SC -CX , that excise duty is on the production or manufacture of goods and is levied upon the manufacture or producer in respect the commodity taxed. The question whether the producer or manufacturer is or is not owner of the goods is not determinative of the liability." Nothing has been brought on record by the Revenue to show that the job workers or contractors were hired labour as contemplated under Section 2 (f) of the Central Excise Act. We, therefore, hold that the respondents are not the manufacture from the impugned goods and as such they are not liable to Central Excise duty. In view of our finding that the respondents are not manufacturer of the impugned goods, there is no necessity to decide the question of classification of the product which is left open to the Department to be decide in appropriate proceedings. We reject the Appeal filed by the Revenue.