DUROFLEX LTD. Vs. COMMISSIONER OF CENTRAL EXCISE, COCHIN

JUDGEMENT

(1.) M /s. Duroflex Ltd. is engaged in the manufacture of coir mattresses, pillows and other products. It took on lease two premises for the purpose of carrying out manufacture of its products. One of the premises belonged to its factory manager, Shri T.J. Antony (Furnishing Centre) and the other to his son Shri Binu Antony (Binu Gardens). M/s. Duroflex Ltd. supplied the entire machinery, raw material and other inputs required for the manufacture of its products; entire production at the two premises was stock transferred to Duroflex Ltd. who thereafter cleared the same. Wages for workers for those two premises was paid by Duroflex Ltd. On 9 -1 -1998, the premises of Duroflex Ltd. was visited by Central Excise Officers who seized certain records and materials. As a result of investigation, show cause notice dated 24 -11 -1999 covering the period from 1995 to 1998 was issued alleging that M/s. Furnishing Centre and M/s. Binu Gardens were manufacturers of the goods in question and that the provisions of Notifications 1/93 and 16/97 have been violated as goods were cleared with the brand name of Duroflex. The notices proposed recovery of duty of Rs. 9,99,876/ - from M/s. Furnishing Centre and Rs. 7,17,845/ - from M/s. Binu Gardens. The notices also proposed imposition of penalty. The demands were confirmed by the Additional Commissioner who imposed penalty equal to duty. He denied the benefit of exemption under Notification 115/75 dated 30 -4 -1975 which exempts certain goods falling under the Schedule to the Central Excise Tariff Act, 1985 and manufactured in factories covered by any of the entries specified in the Schedule thereto annexed (for e.g. coir industry) from the whole of duty of excise leviable thereon on the ground that the goods manufactured by them were not products of coir industry. He rejected the contention of the two units that they were not manufacturers of the goods but that it was Duroflex Ltd. who was the manufacturer. The orders of the Additional Commissioner were upheld by the Commissioner (Appeals) who, however, reduced the duty demands treating the price as cum -duty price. He reduced the duty on Furnishing Centre to Rs. 7,99,901/ - and reduced duty on Binu Gardens to Rs. 5,74,277/ -. Penalties on the two units were reduced to Rs. 5,55,000/ - and Rs. 4,00,000/ - under Section 11AC and Rs. 25,000/ - and Rs. 20,000/ - under Rule 173Q respectively. Hence these appeals.

(2.) WE have heard both sides.

(3.) M /s. Duroflex Ltd. is in appeal against the finding that they are not the manufacturers of the goods in question while M/s. Furnishing Centre and M/s. Binu Gardens are in appeal against the duty and penally holding them to be the manufacturers.