Arihant Udyog Vs Arihant Udyog (CESTAT Mumbai)
As per the activity the appellant is only carrying out affixation of brand on the tools i.e. spanner by embossing/ engraving. This process alone does not amount to manufacture. As regards other processes which are carried out by the job workers, it prima facie appears that the independent process of heat treatment, shot blasting and plating do not amount to manufacture as held in various judgments. However, even if it is held that the activities carried out by the job worker do amount to manufacture the duty liability arises on such job workers as they are the sole manufacturer even though on job work basis.
FULL TEXT OF THE CESTAT JUDGMENT
In all these appeals the common fact is that the appellants are availing SSI exemption vide notification no. 8/2000-C.E. dated 01 .03.2000 in respect of product namely spanners under the brand name “Taparia” owned by M/s Taparia Tools Ltd. Though in general they are not entitled for SSI exemption in respect of goods bearing the brand name of another person but if the unit is located in rural area the goods manufactured even though under the brand name of another person exemption is available.
2. The fact of the process is that the appellants are purchasing unbranded spanner on which they are embossing/ engraving the brand “Taparia”. Thereafter it is sent for job work to various job workers. One job work is heat treatment, the second is shot blasting and the third is plating. All these job work are carried out by individual job worker. Thereafter the spanners are brought to the factory of the appellant and the same are packed and sold. The case of the department is that though the appellant’s factories are located in rural area but major process of manufacturing is carried out by the job workers who are not located in rural areas but in urban areas. Therefore the goods are not completely manufactured in rural area. As per the notification, in order to avail the SSI exemption, the goods should be manufactured by the assessee who is located in rural area. Accordingly, there is a contravention of the notification 8/00-C.E. and the appellants are liable to pay duty on their clearances.
3. Shri M.H. Patil, ld. Counsel appearing on behalf of the appellants submits that firstly the appellant purchased the manufactured spanner. They only embossed/ engraved the brand name of “Taparia”. This process does not amount to manufacture. If at all it is assumed manufacturing process work carried out by the job worker in respective factories located in urban areas and if at all duty liability arises it is recoverable from those job workers who are independent manufacturers. In this regard, he placed reliance on the Larger Bench judgment of this Tribunal in the case of Therm ax Babcock and Wilcox Ltd. & Therm ax Ltd. 2017- TIOL-4390-CESTAT-MUM-LB. He further submits that even if all the processes taken together i.e. process carried out by the appellant as well as by the job workers the activity is not of manufacture as goods are spanner as the process of affixing the brand, heat treatment, shot blasting and plating do not change the form of the product which remains as spanner only. Therefore even entire process does not amount to manufacture. He further submitted that the unit located in the rural area can get the job work done from outside and still the assessee is entitled for SSI exemption. In this regard, he placed reliance on the following judgement:-
