D.C. Mandal, Member (T)

1. The facts of the case, in brief are that the appellants manufactured Organic Surface Active Agent under the brand name of 'Mig detergent bar' and 'Spa Detergent Cake' classifiable under Tariff item 15AA of the First Schedule to the Central Excises and Salt Act, 1944, under an agreement with M/s. Kusum Products Ltd. and availed duty exemption under Notification No. 83/83-C.E., dated 1.3.1983 and removed the goods without payment of Central Excise duty. The agreement between M/s. Kusum Products Limited and the appellants, under which the goods were manufactured, contained, inter alia, the following stipulations :

(i) that the party should manufacture 'the goods' and should use the raw materials according to the specification laid down by M/s. Kusum Products Ltd. from time to time;

(ii) that the party should affix the Brand name of the goods and also pack the same in wrappers and boxes as per specification laid down by M/s. Kusum Products Ltd.;

(iii) that the party should ensure that the goods supplied to M/s. Kusum Products Ltd., conform to the qualities and specifications prescribed by them. M/s. Kusum Products Ltd. may arrange technicians to be deputed to the manufacturing premises of the party for quality control at any stage of processing or packing to maintain quality control;

(iv) that the party shall not claim any right or ownership, goodwill over the Trade Mark, Trade Name, Marking on label, Wrapper or packages or any of them which the party will be applying or use on the goods; and

(v) that the selling price of spa cakes (125 grams) should be Rs. 7,400/- per ton and Mig (150 grams) at Rs. 7,020/- per ton plus excise duty, sale tax and any other taxes or levies as applicable from time to time etc.

2. Notification No. 83/83-C.E., dated 1.3.1983 exempted the goods described in the table below the Notification and falling under Tariff items mentioned against each description of the goods from the whole of central excise duty in respect of first clearances of the specified goods upto an aggregate value not exceeding Rs. five lakhs during a financial year by or on behalf of a manufacturer from one or more factories. For clearances exceeding the first clearances upto Rupees five lakhs duty was payable at the rate of 75% of the duty otherwise leviable if the aggregate value of the clearances did not exceed Rs. 25 lakhs. Paragraph 2 of the Notification stipulated that the exemption under that Notification would not be available if the aggregate value of clearances of all excisable goods for home consumption :

(i) by or on behalf of a manufacturer, from one or more factories; or

(ii) from any factory, by or on behalf of one or more manufacturers.

had exceeded rupees twenty-five lakhs in the preceding financial year. In the impugned order, the Additional Collector has held that the conditions imposed as per the agreement and checks as laid down by M/s. Kusum Products Ltd. from time to time and other binding limitations regarding right of ownership over the trade names, marking on the labels, wrappers and packages clearly establish that M/s. Kusum Products Ltd., are de jure manufacturer of the Synthetic Detergent under Rule 174 and the appellants manufacture these Synthetic Detergent on account of M/s. Kusum Products Ltd. He has also held that since the aggregate value of clearances on behalf of M/s. Kusum Products Ltd. was higher than Rs. 25 lakhs in the preceding financial year 1982-83, the appellants were liable to pay duty on their entire production and they were not eligible for exemption under Notification No. 83/83-C.E., dated 1.3.1983. The Additional Collector has further held that the appellants did not disclose the fact that they were manufacturing the goods under the brand name of M/s. Kusum Products Limited under an agreement and this was done with an intention to avail of partial exemption under Notification No. 83/83-C.E. He has held the view that the appellants suppressed the fact by not menti