K.L. Rekhi, Member (T)

1. The appellants are aggrieved by the impugned orders in pursuance of which central excise duty amounting to Rs. 57,688.27 has been demanded from them on scientific and Industrial Instruments manufactured by them through M/s. India Electrodes and Components ('IEC' for short) and cleared unauthorisedly without payment of central excise duty. Penalty of Rs. 25,000/- has also been imposed on them.

2. We have heard both sides and have carefully considered their submissions and the record. The appellants pressed before us only the following two arguments:

(1) Since the appellants supplied only the raw materials and all manufacturing operations were performed by M/s. IEC, M/s. I.E.C. were the manufacturers and not the appellants; and

(2) the demand show cause 'notice issued on 24.2.1979 for the period 6.3.1975 to 17.1.1978 was time barred. As no allegation of fraud or suppression had been made in the show cause notice and hence the normal time limit of six months applied.

3. We find from the order-in-appeal that the appellants had taken the first plea before the Central Board of Excise and Customs also On this point, paragraph 6' of the Board's order-in-appeal reads as under:

"When it was pointed out that the law in this regard has been settled by the judgment of the Supreme Court in Shree Agencies case (AIR 1972 SC. 78) the argument was not pursued".

The plea has, however, been raised again before us. We observe that it is the admitted position by the appellants that they supplied cast Aluminium cases, Aluminium Rods, Mild Steel Rods, Stainless Steel rods, Stainless Steel Brass and German Silver components etc. to M/s. I.E.C. and M/s. I.E.C. manufactured therefrom scientific and Industrial Instruments, namely, non ferrous pressure gauges, Stainless Steel Pressure Gauges, Mercury-in-Steel Thermometers, Vapour Pressure Thermometers etc. as per specifications of the appellants. The instruments so manufactured bore the brand name and I.S.I. mark of the appellants and they were marketed by the appellants just like similar other instruments manufactured in their own large scale factory. In the facts and circumstances of the case, the status of M/s. I.E.C. was no better than that of hired labour and in fact also they received only the job charges. Section 2(f) of the Central Excises and Salt Act, 1944 defines 'Manufacture' and 'Manufacturer' in the following terms:

"manufacture" includes any process incidental or ancillary to the completion of a manufactured product; and

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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."

According to the aforesaid definition, the lower authorities have held the appellants as manufacturers of the instruments which they got fabricated from M/s. I.E.G. We agree with the lower authorities. The case of the appellants is distinguishable from the usual brand name cases, such as those reported at:

(1) MANU/SC/0192/1985 : 1985 (22) E.L.T. 302(S.C.) - Cibatul Ltd.

(2) MANU/SC/0188/1985 : 1985 (22) E.L.T. 324 (S.C.) - Food Specialities Ltd.

In the aforesaid Supreme Court cases, the brand name owners did not supply the raw materials or components. The manufacturing units used their own materials and they charged full commercial price for the articles manufactured by them. The brand name owners had the right of inspection and they could reject any part of the goods manufactured with their brand name which did not come up to their quality standard. These were the cases of manufacture and sale of on principal to principal basis. However, in the case before us, it is the appellants who were owners of the raw materials and components throughout and at the end they took away all the goods fabricated on their behalf by paying only the job charges to M/s. I.E.G. This was not the case of manufacture