ORDER
V.T. Raghavachari, Member (J)
1. M/s. The Travancore Cochin Chemicals Limited were supplying steel sheets to M/s. Cochin Metal Industries and M/s. Kejariwal Industries which converted the said sheets into steel drums and returned the same to M/s. Travancore Cochin Chemicals Limited. No duty was being paid by the said two firms as they would be entitled to exemption under Notification Nos. 71/78 and 80/80 during the relevant periods. Notice dated 25-11-1981 was issued to all three firms on the basis that the manufacturer of the metal containers shall be M/s. Travancore Cochin Chemicals Limited and duty was, therefore, payable by them as they were not entitled to exemption. After adjudication the Assistant Collector held that M/s. Travancore Cochin Chemicals Limited were the manufacturers of the metal drums and duty was therefore payable by them. On appeal this Order was set aside by the Appellate Collector under Order dated 12-7-1982. He held that it was only M/s. Cochin Metal Industries and Kejariwal Industries that were the manufacturers of the metal containers in question. It is against the said order that the present appeal has been preferred by the Collector of Central Excise, Cochin.
2. We have heard Smt. Saxena for the appellant-Collector and Shri J.B. Koshoy, advocate, for the respondents.
3. The Assistant Collector held the respondents to be the manufacturers of the metal containers, her reason therefore being contained in paragraph 8(a) of her Order. The same reads as follows:
“As per the evidences on record, and as per the submissions of the parties involved in this case, it is seen that M/s. Travancore Cochin Chemicals Limited Udyogamandal have engaged M/s. Cochin Metal Industries and M/s. Kejariwal Industries for manufacture of metal containers on their account out of material supplied by them according to their specifications and requirements. Being so, M/s. Travancore Cochin Chemicals Limited, Udyogamandal, Eloor, squarely come within the meaning of Section 2(f) of the C.E. Act, 1944 for the term “manufacturer”, and I decide this issue accordingly.”
4. The reason, therefore, for the said conclusion was that the material for the manufacture of the metal containers was being supplied by the respondents and that the manufacture was according to their specifications and requirements. On the other hand, the Appellate Collector held that the other two units were the actual manufacturers since they carried on the manufacturing activity independently and supplied such containers not only to the respondents but also to others. He held that the present was “not a case of the two units remaining superficial or in disguise for the sake of appellants”, the appellants in the said quotation referring to the present respondents. ‘
5. Smt. Dolly Saxena relied on a decision of this Tribunal in this case of M/s. Britania Biscuits Company Limited (Order No. 204-207/84-D, dated 19-4-1984). She contended that hi that case also the appellants had supplied raw materials to certain other firms which fabricated metal containers out of the same to the specifications of the appellants and returned the goods and that the Tribunal had held that the appellants were the manufacturers of the metal containers. But we note that this decision had been considered by the Tribunal in a later decision in the case of Metal Box India Limited (1986, Vol. 23 E.L.T. 18) and distinguished on facts. It was pointed out that the agreement between Britania Biscuits Company and the others did not specify as to what would happen to the material rejected as not conforming to the standards of M/s. ]Britania Biscuits Company nor did the agreement refer to the scrap which was bound to arise in the course of manufacture. In the case of Metal Box it was held that though M/s. Metal Box supplied base paper to M/s. Industrial Packaging for the purpose of conversion into wax paper and it was returned to M/s. Metal Box after such conversion, it would only be M/s. Industrial Packaging that would be the manufacturers of the wax papers and not M/s. Metal Box. In coming to the said conclusion, the Tribunal relied on the decisions in the cases of M/s. Andhra Re-rolling Works [1979 (4) E.L.T. (J600)] and M/s. Gangadhar Ramchander [1979 (4) E.L.T. (J 597)] being respectively decisions of the Andhra Pradesh and Allahabad High Courts. The Allahabad High Court held that the person to whom oil seeds were given for being crushed for manufacture of oil and for return of the said oil to the person who supplied the oil seeds was a manufacturer of oil on his own account and would be the manufacturer and not the person who supplied the oil seeds. Similarly, the Andhra Pradesh High Court held that the customer who supplied iron re-rolling would not be the manufacturer in respect of the rolled products but only the person who did the actual re-rolling. This question was again considered by the Tribunal in the case of Collector of Central Excise, Madras v. Modo Plast (Pvt.) Ltd. (1985 Vol. 21 E.L.T. 187). The Bench referred to the decision of the Allahabad High Court cited supra and also referred to two more decisions, one of this Tribunal in the case of M/s. Lucas India Services Limited (1984 Vol. 16 E.L.T. 415) and another decision of the Allahabad High Court in the case of Philips India Limited [1980 (6) E.L.T. 263]). It was pointed out that though M/s. Praga Industries supplied raw materials to M/s. Modo Plast for conversion into urea moulding power and after such conversion the material was supplied by M/s. Modo Plast to Praga industries, that did not make M/s. Praga Industries the manufacturer. The Bench pointed out that M/s. Modo Plast owned their own factory, had a licence in their name and manufactured the goods as an independent contractor and that M/s. Modo Plast cannot be said to be a dummy company. The Bench pointed out that the decision relied on by the Assistant Collector in the said case would apply only to such cases where the actual manufacturers were found to be dummy and fake or were working under the direct control and supervision of the supplier of the raw material and that the transactions between them were not on principal to principal basis.
6. In the present case it may be noted that, as observed by the Appellate Collector, M/s. Kejariwal Industries and Cochin Metal Industries were carrying on their manufacturing activity independently and that they were supplying metal containers not merely to the respondents but to others also. It may be that in respect of materials supplied by the respondents the other two firms were bound to fabricate containers to the standards required by the respondents. But that would not make the said two firms mere dummy firms set up in order to circumvent the provisions regarding payment of duty. As earlier mentioned, the Assistant Collector came to her conclusion merely on the basis that the raw material was being supplied by the respondents and that the same was being converted into metal containers by the other two firms on the orders of the respondents. The second of the said reasons would not mean that the said two firms were acting entirely on behalf of the respondents or as their agents. So long as the contract regarding conversion out of raw material had been entered into on a principal to principal basis, the persons doing the conversion work could not be said to be dummies on behalf of the supplier of the raw material.
7. We, therefore, hold that the Appellate Collector was correct in his conclusion that the respondents were not the manufacturers for purposes of levy of excise duty though the containers have been manufactured out of raw material supplied by the respondents. Accordingly, we dismiss this appeal.