INDIAN APPLIANCES COMPANY Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THE issue involved in this appeal is whether the value of clearance of medicine cleared by the job workers has to be clubbed with the value of clearance of medicine manufactured and cleared by M/s. Mayo (India) Ltd. for the purpose of computing the aggregate value of clearance under Notification No. 175/86.

(2.) BRIEFLY stated the facts are that the appellants manufactured medicine and availed benefit of SSI exemption under Notification No. 175/86, dated 1 -3 -1986. They had also entered into agreement with certain other manufactures in Bombay and Hyderabad Collectorate jurisdiction for manufacture of medicines as loan licensee out of raw materials supplied by them as per appellant's specifications, requirements and bearing their trade mark and brand name. The Collector, Central Excise, in the impugned order, confirmed the demand of Central Excise duty amounting to Rs. 23,15,432.26 and imposed a penalty of Rs. 10,000/ - holding that the appellants were the manufacturers of the goods manufactured by them as a loan licensee at the premises of loan licensors. Loan Licensor simply worked as hired labourer having no right on raw materials or final products; that the turn over of such goods had been accounted by the appellants in their balance sheet. He relied upon the decisions in the case of Dukes Pharma v. G.O.I. 1994 (69) E.L.T. 433 (Mad.) and Indica Laboratories Pvt. Ltd. v. U.O.I. 1990 (50) E.L.T. 210 (Guj.) and concluded that benefit of Notification No. 175/86 was not available as the value of clearance by a manufacturer from one or more factories had exceeded Rs. 15 crores/2 crores during the preceding financial year.

(3.) SHRI S. Ganesh, ld. Advocate submitted that the other manufacturers were completely independent parties and they were not in any manner related to or inter -connected with the appellants; that in fact there was no allegation by the Department that any such relationship existed between the appellants and the loan licensors; that the terms and conditions of the Agreement clearly establish that the manufacturer of the goods produced in loan licensor's factories were themselves and not the appellants. He referred to Clause 4 of the agreement with M/s. Adore Pharmaceuticals P. Ltd. according to which the manufacturer had agreed to manufacture the products and sell the same to the appellants subject to the terms and conditions, inter alia, that the products would be sold by the manufacturer and bought by the Appellants on a principal to principal basis; the products would be manufactured in accordance with the standards of specifications and as per the quality control standards, specified by the appellants; that nothing in Agreement would constitute or demand to constitute to either party as the Agent of the other; that the manufacturer was free to sell similar products to other parties. The ld. Advocate further submitted that the said manufacturers had been duly assessed to excise duty in respect of the products manufactured and supplied by them; that the appellants were merely a trader and accordingly turn over of these goods could not be clubbed with their (Appellants) turn over for the purpose of Notification No. 175/86; that the appellants cannot be regarded as manufacturers under Section 2(f) of the Central Excise Act and reliance was placed on the following decisions : -