H.R. Syiem, Member (T)

1. This appeal came before the bench on 18.4.1986. It was found that there was some unclarity about the proper transfer of the revision petition from the Government of India to this Tribunal. The Registry reported that the matter had indeed been regularly transferred. The appeal was then heard on 14.5.1986.

2. The learned Counsel for the appellants argued that his main contention was that M/s. Shakti Udyog could not be regarded as the manufacturers of the steel utensils made by M/s. Mittal Steel Works, Vishwakarma Industries, Mittal Industries and Nishkam Udyog on their behalf, even though they sent stainless steel flats to them for the purpose. The manufacturer of the steel utensil is that person who makes the utensil from the raw material steel sheet or flat, and not the supplier of the steel sheet or even the owner of the utensil. It might be true, said the counsel, that they owned the steel sheets and utensils made from them; but they were not the manufacturers of the utensil. The other units who made the utensils for them were themselves independent units who manufacture goods not only for them but also for any one who placed orders with them. The Collector had no authority to say that the 4 other units must be held to be only contractors in relation to M/s. Shakti Udyog, and that the latter were the manufacturers within the meaning of Section 2(f) of the Central Excises Salt Act, 1944 of the stainless steel utensils manufactured on their account.

3. All other arguments will be more or less secondary once the above issue is decided, submitted the learned counsel.

4. The learned SDR argued very vehemently against the appellants saying that the arguments set out by the Collector in his order were sufficient to convince any one that the utensils were manufactured and cleared on behalf of M/s. Shakti Udyog by the other units and so must be accounted as manufactures and clearances of M/s. Shakti Udyog themselves for the purpose of notification No. 176/77-CE. He said he specially relied on the Shree Agency judgement of the Supreme Court 1977 ELT (J168)(S.C.) to maintain that M/s. Shakti Udyog engaged in the manufacture of the utensils, when they employed the 3 or 4 other units to make the goods for them. The ratio of the judgement, as discussed by the Collector would apply squarely to enable the manufactures by the other unit also to be taken into consideration to arrive at M/s. Shakti Udyog's production and clearances. He said the appeal had no merits.

5. We can see in the order No. 1/CE/81 dated 21.1.1981 passed by the Collector Central Excise, Chandigarh that there was no dispute that the utensils were manufactured by the 4 outside units. There was no dispute either that the manufacture was on behalf of M/s. Shakti Udyog and that the stainless steel sheets were sent by them and that the goods remained the property of M/s. Shakti Udyog at all times. The makers simply fabricated the utensils and charged the owners for the work.

6. In these conditions it is not permissible to adjudge the utensils as the manufactures of M/s. Shakti. Udyog or as cleared on their behalf. The utensils were manufactured by the four independent units and they were the manufacturers of the utensils, even though M/s. Shakti Udyog were their owners. Ownership does not make a man a manufacturer, anymore than giving a pieces of cloth to be made into a shirt turns one into a tailor. We must not mistake these two activities - they are separate even when they converge in the same person. Owning and manufacturing are distinct roles and this distinction must be kept in view.

7. The Central Excise say M/s. Shakti Udyog engaged in the manufacture of utensils by getting utensils made by other persons, and rely on the Shree Agency judgement of the Supreme Court 1977 ELT (J168)(S.C.). M/s. Shakti Udyog did indeed, by employing the 4 outside units, cause stainless steel utensils to be manufactured. But it -is well to note what the honourable c