Full Judgment
3. The brief facts of the case are that M/s. AGH Auto Engineers are manufacturing forging of bolts, Nuts and Studs and the same were cleared after availing the small scale exemption notification to Great India Machine Tools (M/s. GMT). The demand was raised against M/s. AGH on the ground that they were manufacturing and clearing the goods with the brand name of other company i.e. M/s. GMT. The penalty was also imposed on M/s. GMT. The finished goods bearing the brand name were confiscated from the premises of M/s. GMT on the ground that these were cleared without payment of duty.
4. The contention of the appellant is that M/s. AGH are manufacturing only forging and the brand name of M/s. GMT is in the dye of forging, therefore, the goods cleared by the appellant are with the brand name of M/s. GMT. The contention of the appellant is that they are only clearing the forging and not the complete nut and bolts. The other processes such as reducing, threading etc. were undertaken by M/s. GMT, therefore, the complete nut and bolts come into existence at the hand of M/s. GMT. The appellant relied upon Board's Circular dated 27-10-1994 whereby it has been clarified that where forgings were cleared bearing a brand name and such forgings are further use in the manufacture of other items the benefit of small scale exemption notification cannot be denied to the manufacturers of the forging.
5. The contention of the Revenue is that the appellants are clearing finished goods and both the appellants are one and the same firm, therefore, they are not entitled for the benefit of small scale exemption notification.
6. We find that the Commissioner of Central Excise in the impugned order held that both the noticees are independent manufacturers and dropped the demand of duty of Rs. 28,10,456/- and, therefore, now the Revenue cannot say both the noticees are not independent manufacturers.
7. M/s. AGH manufacturing forging which are bearing the brand name of M/s. GMT. The brand name comes on the forging because it is in the dye.
The appellants are not manufacturing complete nuts and bolts. The Board's Circular clarified that castings are manufactured as per the specific requirement of customers and the brand name which the small scale units puts on such castings is meant for use of the customers only for further manufacture. Castings having such brand name are not sold in the market as castings as such, because it will be on no use to another person. The board clarified that benefit of small scale exemption in such cases cannot be denied. In the present case we find that forgings were cleared to M/s. GMT and M/s. GMT undertakes further processes to make the complete nuts and bolts. In these circumstances, in view of the above Board's circular the benefit of small scale exemption notification cannot be denied to M/s. AGH. Therefore, demand is not sustainable and set aside and the consequential penalties also set aside. As we held that the goods were not branded, therefore, confiscation of the goods on the ground that branded goods were cleared without payment of duty-is also not sustainable and set aside. The appeals are allowed.