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1983 Supreme(Cal) 19
High Court Of Calcutta
CHITTATOSH MUKHERJEE
ASSOCIATED PIGMENTS LIMITED - Appellant
Versus
COLLECTOR OF CENTRAL EXCISE - Respondent
Civil Rule 12 (W) Of 1981
Decided On : 02/03/1983
ARCHANA SENGUPTA, B.P.BANERJI, D.N.DAS, N.L.BANERJI, P.P.Ginwalla, R.N.DAS, SARDAR AMJAD ALI, SUBHASH CHAND BOSE, TAPAN PAL
The exemption under Notification No. 119/75-C. E. , dated 30th April, 1975 is not confined to those manufacturing processes undertaken by a job worker which do not result in the change of identity of the article handed over by the customer for job work.
Headnote:
CENTRAL EXCISE - EXEMPTION - NOTIFICATION NO. 119/75-C. E. , DATED 30TH APRIL, 1975 - INTERPRETATION - SCOPE AND EFFECT - GOODS FALLING UNDER ITEM NO. 68 OF THE FIRST SCHEDULE TO THE CENTRAL EXCISES AND SALT ACT, 1944 MANUFACTURED IN A FACTORY AS A JOB WORK - EXEMPTION FROM SO MUCH OF THE DUTY OF EXCISE LEVIABLE THEREON AS IS IN EXCESS OF THE DUTY CALCULATED ON THE BASIS OF THE AMOUNT CHARGED FOR THE JOB WORK - MEANING OF "JOB WORK" - WHETHER THE EXEMPTION IS CONFINED TO THOSE MANUFACTURING PROCESSES UNDERTAKEN BY A JOB WORKER WHICH DO NOT RESULT IN THE CHANGE OF IDENTITY OF THE ARTICLE HANDED OVER BY THE CUSTOMER FOR JOB WORK - HELD, NO.
Fact of the Case:
The petitioner company used to receive pig lead or lead ingots from its customers for conversion into lead suboxide and lead monoxide. After subjecting the said lead to the process, mentioned in paragraph 3 of the writ petition filed in C. R. No. 12 (w) of 1981, the petitioner returned the finished products to its customers and charged the agreed price for the said process. The petitioner itself did not supply any material for manufacture of lead sub-oxide and lead monoxide (lithergo) and the petitioner has claimed that in undertaking the aforesaid manufacturing process it performed job work and it was entitled to exemption in terms of the Notification No. 119/75-C. E. , dated 30th April, 1975.
Finding of the Court:
The court held that the petitioner company was entitled to exemption from payment of excise duty in respect of lead suboxide and lead monoxide processed by the petitioner from pure tead or lead ingots supplied by its customers. The respondents had acted illegally by levying excise duty in respect of the said products processed by the petitioner as job work.
Issues: Whether the petitioner company was entitled to claim exemption from payment of excise duty in respect of lead suboxide and lead monoxide manufactured in its factory in terms of the Notification No. 119/75-C. E. , dated 30th April, 1975 issued by the Government of India in exercise of the powers conferred by Rule 8 (1) of the Central Excise Rules, 1944.
Ratio Decidendi: The court interpreted the scope and effect of the Notification No. 119/75-C. E. , dated 30th April, 1975 and held that the exemption under the said Notification is not confined to those manufacturing processes undertaken by a job worker which do not result in the change of identity of the article handed over by the customer for job work. The court also held that the use of expression "that article" in the explanation to the aforesaid Notification No. 119/75-C. E. dated 30th April, 1975 does not contemplate that after job work the same or the identical goods is to be returned in order to qualify for exemption under the said Notification.
Final Decision: The court made the Rules absolute and issued Writs of Mandamus commanding the respondents not to levy excise duty upon the goods mentioned in the petition which were processed by the petitioner as job work, and further commanded the respondents to grant the petitioner benefits of the Notification No. 119/75-C. E,, dated 30th April, 1975 during the period the said Notification had remained in force. The court also issued Writs of Certiorari quashing assessment, levy and demand of excise duty and appellate orders made by the respondent in respect to the aforesaid articles supplied by the petitioner's customers and were returned by the petitioner after undertaking manufacturing process as job worker. Finally, the court issued Writs of Mandamus commanding the respondents to refund to the petitioner of excise duties paid by the petitioner under protest in respect of the aforesaid goods.
( 1 ) IN this three Rules the main question is whether or not the petitioner company, was entitled to claim exemption from payment of excise duty in respect of lead suboxide and lead monoxide manufactured in its factory in terms of the Notification No. 119/75-C. E. , dated 30th April, 1975 issued by the Government of India in exercise of the powers conferred by Rule 8 (1) of the Central Excise Rules, 1944.
( 2 ) THE Finance Act, 1975 had inserted in the First Schedule of the Central Excises and Salt Act, 1944, now Tariff Item No. 68 under which "all other goods not elsewhere specified manufactured in a factory" became subject to duty at the specified rate. In the exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government by the aforesaid Notification No. 119/75-C. E. , dated 30th April, 1975 had "exempt goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 (I of 1944) manufactured in a factory as a job work from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the amount charged for the job work. During the material period, the petitioner used to receive pig lead or lead ingots from its customers for conversion into lead suboxide and lead monoxide. After subjecting the said lead to the process, mentioned in paragraph 3 of the writ petition filed in C. R. No. 12 (w) of 1981, the petitioner returned the finished products to its customers and charged the agreed price for the said process. The petitioner itself did not supply any material for manufacture of lead sub-oxide and lead monoxide (lithergo) and the petitioner has claimed that in undertaking the aforesaid manufacturing process it performed job work and it was entitled to exemption in terms of the Notification No. 119/75-C. E. , dated 30th April, 1975.
( 3 ) THE respondents have disputed the petitioner's' claim for such exemption on the ground that pure lead supplied by the petitioner's customers after undergoing manufacturing process became entirely new articles or goods, namely, lead suboxide, and lead monoxide, whose character, use and name in trade parlance were different from pure lead supplied by the petitioner's customers. Only in case the article which is supplied by the customer after some manufacturing process is returned, exemption from the payment of duty could be claimed under the said Notification. In case, not, the same article supplied by the customers but an entirely new article is returned, the person who undertakes manufacturing process cannot claim exemption in terms of the Notification No. 119/75-C. E. , dated 30th April, 1975. In other words, in terms of the said Notification goods falling under Item No. 68 of the First Schedule of the Act 1 of 1944 qualify for exemption only in case articles supplied to the job worker even after undergoing manufacturing process continued to be the same articles or goods.
( 4 ) I am unable to accept the interpretation put by the respondents upon the scope and effect of the said Notification No. 119/75-C. E. , dated 30th April, 1975. In the first place, the said Notification exempted goods falling under Item No. 68 of the First Schedule to the Central Excises and Salt Act, 1944 manufactured in a factory as a job work from so much of the duty of excise leviable thereon as is in excess of the duty calculated on the basis of the amount charged for the job work. It is settled law that the test for determining whether a particular process through which a commodity passes amounts to manufacture is to ascertain whether such "proceeding of the original commodity brings into existence a commercially different or distinct commodity" (vide Chowgule and Co. Pvt. Ltd. and Anr. v. The Union of India and Ors ). Article manufactured means to bring into existence a new substance and does not mean merely to produce some change in the substance (vide Union of
