Whether brand owner is a manufacturer?
Sometimes brand owner does not manufacture the goods but it get made from other manufacturers.
In this case, who will be the manufacturer, the brand owner or actual manufacturer?
If brand owner exercises control and supervision over the whole manufacturing process, then he will be called as manufacturer.
If the brand owner barely gets the goods made as per his specification, then the person manufacturing it will only be called as manufacturer
A purchases cloth and gives it to B, who is a tailor, to stitch a shirt as per measurements and
requirements of A. B stitched the shirt and gave it to A. In the given case, who will be treated
as manufacturer of the shirt for the purpose of levy of central excise duty?
A person who carries out actual manufacturing process is considered as ''manufacturer‟ for the
purpose of levy of central excise duty even if raw material is supplied by someone else and
goods are manufactured as per the specifications of such person. In other words, ownership
of raw material is not relevant.
Therefore, in this case, B (tailor), being the actual manufacturer, will be treated as
''manufacturer‟ for purpose of levy of excise duty even though the cloth (raw material) for
making shirt is provided by A and the shirt is stitched as per his specifications.
Famous Hero Motors Ltd. purchases raw material and supplies it to JBK Engineering
Company. JBK Engineering Company manufactures automobile components as per the
design supplied by Famous Hero Motors. Such components bear brand name of Famous
Hero Motors Ltd. namely, 'Famous Hero'. JBK Engineering Company supplies these
components to Famous Hero Motors Ltd., who in turn sells them in market as spare parts of
automobiles. Who is liable to pay central excise duty on such components?
Liability to pay central excise duty falls on actual manufacturer of goods. Therefore, in this
case, JBK Engineering Company, being actual manufacturer, will be liable to pay excise duty.
This would be so even if raw material does not belong to them and goods manufactured by
them bear the brand name of Famous Hero Motors Ltd. as in case of central excise,
ownership of goods is not the relevant criterion to determine duty liability.