- (1.) It appears that during the course of inspection of M/s. Containers and Components, Madras, it was noticed that it was manufacturing metal containers out of tin sheets supplied by the appellants on job work basis. The containers were manufactured according to standards prescribed by the appellants. It was then discovered by the Excise authorities that the appellants were also getting containers fabricated by three other units. The value of the containers manufactured for the appellants by these Run units exceeded Rs. 2 lakhs, except during the year 1971-72. The appellants were, therefore, issued a notice on 13/05/1974, to show cause why they should not be held to be the manufacturers of the containers, why it should not be held that they were not entitled to exemption under a notification dated 1/05/1970, and why they should not be held liable to pay Excise duty. The Assistant Collector upheld the demand in the notice. The appeal filed before the Appellate Collector was, in substance, dismissed. The appellants preferred revision applications to the government of India which, upon the establishment of the Customs, Excise and Gold (Control) Appellate tribunal, stood transferred to the tribunal.
(2.) The tribunal, in the judgment and order under appeal, referred to the definition of 'manufacturer' in Section 2 (f) of the central Excises and Salt act, 1944. It noted that the containers were excisable goods, that the appellants supplied the metal sheets required for the manufacture of the containers and that the containers were essential for the packing of the appellants' biscuits. It took the view that if a person got goods manufactured by others under his direction and control then he would be the manufacturer thereof. Note was taken of the fact that a fixed rate was paid to the units, that the appellants hada right to reject the containers and that there was no provision in the work orders that related to the scrap. The four units held separate licences, but on that account it could not be held that they were the manufacturers and not the appellants. Though the appellants had not actually hired the workers of these units, it was reasonable to conclude that the appellants were engaged in the production of excisable goods, viz. , the containers, on their own account.
(3.) We are in no doubt that the tribunal misdirected itself. Section 2 (f) defines 'manufacture' which, insofar as it is relevant, reads thus :- "S.2. In this Act, unless there is anything repugnant in the subject or context, - (F) "manufacture" includes any process - (I) incidental or ancillary to the completion of a manufactured product; (Ii) which is specified in relation to any goods in the Section or chapter Notes of the Schedule to the central Excise Tariff act, 1985 as ilmounting to manufacture and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account. "a manufacturer therein is a person who employs hired labour in the production or manufacture of excisable goods and a person who engages in their production or manufacture on his own account.;