S.C. Jain, Member (J)

1. The facts of the case in brief are that M/s. Metal Box India Limited, (hereinafter called the appellants) are the manufacturers of various types of packaging material. During the period 1st March, 1974 to 14th March, 1976, the appellants supplied base paper to M/s. Industrial Packaging for the purpose of manufacturing waxed paper. M/s. Industrial Packaging after manufacturing waxed paper to the extent of 46,557 Kgs. returned the said waxed paper to the appellants after charging conversion charges. The appellants did not pay excise duty on the waxed paper so got manufactured from M/s. Industrial Packaging. Show cause notice was, therefore, served upon the appellants asking them as to why penalty under Rule 173Q should not be imposed and excise duty of Rs. 69,494.56 should not be demanded or realised under Rule 9(2) of the Central Excise Rules, 1944 in respect of 65,441.3 Kg. of such waxed paper.

2. In reply to the said show cause notice the appellants stated, inter alia, that they had no facility for manufacture of waxed paper and as such they did not apply for the excise licence nor they held licence for manufacture of the said waxed paper; that on request of some of their big customers, they used to procure suitable paper from paper mills, print them on their printing machines and used to send the said printed paper to M/s. Industrial Packaging for manufacture of waxed paper and that the appellants used to pay conversion charges plus appropriate excise duty to M/s. Industrial Packaging for the job done by them and that during the period in question they paid to M/s. Industrial Packaging, Rs. 70,124.63 towards the excise duty and that the mere fact that the appellants supplied the base paper for converting the same into waxed paper by M/s. Industrial Packaging should not in their own opinion make the appellants as 'manufacturer' as pointed out in the show cause notice. Two decisions one of Andhra Pradesh High Court reported in 1979 E.L.T. J 600 and the other of Allahabad High Court reported in 199 E.L.T. J 597 were also relied upon by the appellants wherein it was held that a customer cannot be treated as manufacturer merely because he has supplied raw material to the actual manufacturer.

3. The authorities below, however, did not accept the contention of the appellants and relying upon the decision of the Hon'ble Supreme Court in the case of Shree Agency reported in 1977 E.L.T. J 168 held that the appellants are the manufacturers of the goods in question and are liable to pay duty. The order regarding imposition of penalty was, however, set aside by the Central Board of Excise and Customs, who heard the first appeal.

4. Not satisfied with the order passed by the Board, the appellants filed Revision Application before the Government of India, Ministry of Finance, Department of Revenue, which now stands transferred to this Tribunal to be heard as an appeal.

5. We have heard Shri N. Mukherjee, Advocate, for the appellants and Shri A.S. Sundar Rajan, J.D.R., for the department and gone through the record.

6. Shri Mukherjee, the learned Counsel for the appellants submitted that the appellants cannot be called manufacturers of the waxed paper which, in fact, had been manufactured by M/s. Industrial Packaging in their factory. He cited two decisions one of Andhra Pradesh High Court in the case of Andhra Rerolling Works, Hyderabad v. Union of India (1979. E.L.T. J 600) and the other of Allahabad High Court in the case of Gangadhar Ramchandra v. Collector of Central Excise, U.P. (1979 E.L.T. J 597) in support of his contention that a customer cannot be treated as manufacturer merely because he supplied raw materials to the actual manufacturer. According to him, it is the owner or occupier of the factory where the manufacturing process takes place, who is the manufacturer and not a person who merely brings the raw material for manufacturing of the product. He also drew our attention towards the decision of Speci