CENTRAL EXCISE Vs. BHARAT ELECTRICAL INDUSTRIES LTD
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
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(1.) M/s. Bharat Eiectrical Industries Ltd., 64, Biren Roy Road (East), Calcutta-700 008, hereinafter referred to as "the said Company", have been charged for contravention of the provisions of Rules 9(1), 52A, 53 and 226 of the Central Excise Rules, 1944, hereinafter referred to as "the said Rules", as the said Company are alleged to have not paid proper duty on 2,54,000 pcs. of Electrical Bulbs falling under Item No. 32 of the First Schedule to the Central Excises and Salt Act, 1944, hereinafter referred to as "the said Schedule", got manufactured from M/s. Bengal Electrical Lamp Works Ltd., Calcutta with their registered trade Mark "Kiron" and sold the same through their own sales office/branches at different places during the period from October, 1978 to January, 1979 without observing excise formalities.
(2.) The facts of the case in brief are that the said Company entered into a contract with M/s. Bengal Electrical Lamp Works for manufacture/supply of Electrical Bulbs of different watts with their registered trade name "Kiron". Accordingly, the latter firm holding licence for manufacture of Electrical Bulbs manufactured and supplied 2,54,000 pcs, of Kiron Brand Electrical Bulbs of different watts valued Rs. 7,81,300/- to the said Company on payment of duty as per rate contract. The said Company in turn marketed those products through their sales office/branches at their own listed prices. Singe M/s. Bengal Electrical Lamp Works had no right of sale/pricing/distribution of the said bulbs, the said Company are alleged to be the manufacturer of the said bulbs as per Section 2(f) of the said Act and accordingly, their selling price should be the basis of assessment.
In the above premises a Show Cause Notice C. No. V (15) (32) 24/Cal-XI/79/7213 dated 2-11-79 was issued to the Company by the Assistant Collector of Central Excise, Calcutta XI Division directing the said Company to show cause to the Collector of Central Excise, Calcutta as to why ;
(a) a panalty should not be imposed on the said Company under Rule 173Q of the said Rules and
(b) differential duty amounting to Rs. 90,728.38 should not be realised from the said Company.
(3.) THE said Company in their reply dated the 16th January, 1980 denied the charges stating inter-alia that
(i) the said Company by their letter dated 9-9-78 addressed to the Managing Director of M/s. Bengal Electrical Lamp Works Ltd. placed an order for supply of 2,50,000 pcs. of electric bulbs of various watts with their brand name 'Kiron' and the Bengal Electrical Lamp Works Ltd. also by their letter dated 14-9-78 confirmed their acceptance of the said order.
(ii) the said Company did not supply any raw materials to M/s. Bengal Electrical Lamp Works Ltd. for manufacture of the said bulbs and the transactions between the said Company and M/s. Bengal Electrical Lamp Works Ltd. were one of sale and purchase of the said bulbs and accordingly the said Company cannot be treated as manufacturer within the meaning of Section 2(f) of the said Act in respect of Electric Bulbs manufactured by M/s. Bengal Electrical Lamp Works Ltd. with the brand name "Kiron".
(iii) it has been held by different High Courts that merely because the manufacturer manufactured goods with customer's brand name, the customer cannot be treated as manufacturer and in support of their contention referred to the following judgements:
1) Judgement of the Gujarat High Court in the case of Cibatul Ltd. v. Union of India 1978 Cen-Cus/ID.
2) Judgment of Allahabad High Court in the case of Hind Lamps Ltd. v. Union of India 1977 Cen-Cus/84D.
3) Judgement of Calcutta High Court in the case of S.K. Chakravorty v. Collector of Central Excise, Calcutta.
4) Judgment of Patna High Court in the case of Bata India Ltd. v. Assistant Collector of Central Excise, Patna.
(iv) the Department has also accepted the above principle in the case of Prints Find Duplicators Pvt. Ltd. as it would be seen from the Order-in-appeal No. 140/CE/76 dated 2-2-76 passed the Appellate Collector of Central Excise, New Delhi.
(v) In view of the law enunciated by the different High Courts, the allegation that the said Company are the manufacturer of the said goods does not stand and accordingly, the question of contravention of the provisions of various rules referred to in the Show Cause Notice does not arise.
THE said Company also desired to be heard in person in the matter.;
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