Judgment:
1. These appeals are filed by the Revenue against the order of the Commissioner (Appeals) who in the impugned order set aside the order of the lower authority.
2. Briefly the facts are that M/s. Paras Plastics is a Central Excise registrant. It is a partnership firm. Shri Yogeshchandra V. Shah is one of its partners. The firm manufactures plastic articles on its own and also gets the goods manufactured by job workers by supplying them raw materials and moulds.
3. In the same premises another trading firm, by name Suyog Corporation, operates. This is a proprietary firm. Shri Yogeshchandra Shah is the proprietor. Now, what this person does is to supply raw materials and moulds to the same job workers who work for M/s. Paras Plastics, gets his goods manufactured and sells them. The evidence does not disclose that the raw materials and moulds supplied by this trading firm to the job workers belongs to M/s. Paras Plastics. Evidence also does not disclose that goods which were returned by job workers to M/s.
Suyog Corporation are further put to any manufacturing process by M/s.
Paras Plastics.
4. The Revenue's case is that the activity carried out by M/s. Suyog Corporation though drubbed as trading activity, by the respondent, it is in fact a manufacturing activity being carried out by M/s. Paras Plastics. The latter suppressed his production and thereby evaded duty.
The premises on which the theory is built is that (a) M/s. Paras Plastics and M/s. Suyog Corporation operate from the same premises; (b) Partner in one firm is the proprietor of the other; (c) Both the firms get their goods manufactured from the same job workers; (d) Common administrative arrangements exist; (e) job workers deliver the goods to the same premises, etc. etc.
5. The Commissioner (Appeals) held that mutuality of interest in each other's business is not established and therefore the turnover of the firms cannot be clubbed. Learned DR supported the department's appeal.
The learned advocate for the respondents filed case law in support of the contention that a raw material supplier cannot be called a manufacturer. M/s. Suyog Corporation gets goods manufactured through job workers supplying them raw materials, moulds etc. and sells the finished goods. The sale turnover cannot be clubbed with the turnover of the manufacturer, M/s. Paras Plastics, and fasten them with duty liability (Kartik Telecomptrols (P) Ltd. v. CCE, Delhi-I 2002 (141) ELT 800). Heard both sides.
6. I have gone through the rival contentions. The Revenue failed to establish that M/s. Suyog Corporation is engaged in manufacturing activity. (sic) materials and moulds to job workers, gets the goods manufactured and trades in them. Its activity is distinct from the one carried out by M/s. Paras Plastics who is engaged in manufacture of goods. Secondly, the fact that both the activities are being carried out in the same premises does not automatically mean that both are engaged in the manufacture of goods. If the activities are carried out from two different premises, the department could not have clubbed me turnover of the two firms.
7. I am surprised though as to why the department permitted trading activity of the same goods from the premises where manufacturing activity is carried out. If they have not permitted it and M/s. Paras Plastics allowed trading of plastics goods without the department's permission, action should have been taken against M/s. Paras Plastics on that count instead of trying to club their turnover with that of M/s. Suyog Corporation. Having failed to do so, the department cannot come round and allege that M/s. Paras Plastics suppressed their production.
8. The appeals are rejected. The order of the Commissioner (Appeals) is upheld.