- (1.) A substantial question of law has arisen in this appeal. We are of the opinion that this substantial question of law is inextricably connected with the facts of this case and that an order of remand to the tribunal would best subserve the interest of justice.
(2.) The issue here is very short. The assessee sent materials to diverse job workers for manufacture of the final product. Only inspection of the finished goods was carried out at the premises of the assessee. If the job workers are proved to be the agents of the assessee who work under their supervision and control, then the assessee is the real manufacturer and not the job workers. Excise duty is payable by the assessee. On the other hand, if the job workers are proved to be independent contractors with little or no supervision by the assessee then they are the manufacturers and the liability of paying excise duty is with them. This issue was before the Supreme Court in Collector of Central Excise, Baroda v. M. M. Khambhatwala reported in 1996 (84) ELT 161 (SC). The Supreme Court observed in paragraph 7 as follows: "7. We have considered the submissions advanced before us by the learned counsel on both the sides. We find force in the arguments of the learned counsel for the respondents : on the admitted facts which we will set out immediately the respondents cannot be considered as manufacturers of agarbatti, amlapodi and dhup etc. manufactured in the premises of house-hold ladies as described above without the aid of power. The undisputed facts are that the respondents supplied raw materials for rolling incense sticks etc. to outside manufacturers and paid wages to them on the basis of number of pieces manufactured. Such manufacture was without the aid of power. There was no supervision over the manufacture. Incense sticks were put in packets and such packets were sold from the premises of the house-hold ladies and they did not go to the factory premises of the respondents. No doubt the sale proceeds went to the respondents but that will not change the character of manufacture. If the conclusion is that the house-hold ladies were the real manufacturers then the decision of the Tribunal cannot be faulted. CEGAT after considering the materials before it concluded that the respondents are not the manufacturers of agarbati, amlapodi, dhup etc. manufactured by various cottage type manufacturers on job work basis. On the facts narrated above, we do not think that the assumption of the Collector that the respondents got the goods in question manufactured by 'hired labourers' can be sustained. On the other hand we find, on the facts, the house-hold ladies are the manufacturers of the goods in question and the liability to excise duty will be attracted on their manufacture of the goods and therefore, it cannot be clubbed with the goods manufactured in the factory premises of the respondents to deny the exemption claimed."
(3.) In this case, the tribunal, in our opinion, addressed the issue, without bearing in mind the above principle of law. We do not hesitate to say that the tribunal has passed a detailed and well considered order. But for some reason this distinction between a manufacturer and an agent of the manufacturer and the liability to pay excise duty has not been investigated by it.;