ORDER
C.N.B. Nair, Member (T)
1. This appeal of M/s. S.M. Auto Engg. Pvt. Ltd. is directed against Order-in-Original No. 32/CEX/90 passed by the Additional Collector of Central Excise, Pune. The appellants are manufacturers of brake assembly. One of their buyers is M/s. Bajaj Tempo. On account of strike in their factory, they were not able to carry out production in their own factory. During such period they entered into a labour contract with M/s. Bajaj Tempo. They were paid for the assembly work carried out on piece rate basis i.e. over Rs. 60/- per thousand brake assembly. The impugned order has demanded duty on the appellants on the ground that they were the manufacturers for the goods so assembled in the factory of Bajaj Tempo. Arguing the appeal Shri Jawaharlal, learned Counsel explained that the contract was only for supply of labour for assembly of brakes. The parts required for the assembly, the machinery required for the same, and facilities including the electricity, and premises were all supplied by M/s. Bajaj Tempo. In these circumstances, the appellant could not be treated as the Job worker or a manufacturer. He also submits that it is not permissible to treat a labour contractor as a manufacturer and demand of duty from him. Shri Jawaharlal also submitted that the demand also included about Rs. 21,000/- on account of the manufacture of table and other furniture items in their own factory. He does not press the claim of exemption on these goods under Notification 217 of 1986.
2. Countering the arguments Shri R.D. Negi, learned DR submitted that the Order-in-Original has held M/s. S.M. Auto Engg. Pvt. Ltd., to be the manufacturer for valid reasons. He draws our attention to para 2 of the impugned order which states that appellants were using their own material and only some of the main components like Brake shoe inner, Brake shoe outer and Brake back plate were supplied by M/s. Bajaj Tempo. He also submits that there is a finding that the manufacturing activities were supervised and controlled by M/s. Bajaj Tempo. He draws our attention to Tribunal’s decision in M/s. Cardcure Engineering Co. v. Commissioner of Central Excise, Coimbatore -1996 (86) E.L.T. 351 (Tribunal) wherein it has been held that in respect of goods produced on job work basis out of raw material supplied by customer, the job worker is the manufacturer. He also drew our attention to paras 3.4 and 3.5 of the order.
3. In his reply Shri Jawaharlal clarifies that the finding of the order in para 3.2 regarding use of their own raw material is not factually correct. As they were not in a position to carry out manufacture in their factory on account of strike, the appellant had sold the raw materials to M/s Bajaj Tempo. They had also reversed Modvat credit they had taken on the goods. Therefore, the materials did not belong to the appellant.
4. We have gone through the records of the case and have considered the rival submissions. We find that the work was carried out by the appellant in the premises of M/s. Bajaj Tempo under a labour contract dated 8-4-1989. In terms of the contract, the appellant should receive payment for the assembly of parts and all the materials, machinery, premises. Electricity and other requirements were being supplied by Bajaj Tempo. It is,-therefore, clear that the contract is only for labour supply and not for a job work or manufacture. In the circumstances, we hold that the finding in the adjudication order that the appellant manufactured the goods cannot be sustained. The appeal is accordingly allowed with regard to the duty demand on the goods assembled at Bajaj Tempo. The appellant shall pay the duty demand relating to the manufacture of table and other furniture.