2012 (11) TMI 488 - HC - Customs

Notification No.32/97/Cus. dated 1/4/1997 - denial of claim as the activity undertaken is not an activity of jobbing - Held that - The word jobbing has not been defined under the Customs Notification No.32/97/Cus. dated 1/4/1997 and therefore one would have to apply general meaning of the word jobbing which would mean carrying out predetermined job as directed by the supplier of raw material and returning the resultant product to the supplier. The aforesaid activity is admittedly being carried out by the assessee Revenue s contention that the activity carried out by the respondent is not job work in view of the decision of Prestige Engineering India Limited (1994 (9) TMI 66 - SUPREME COURT OF INDIA) is misplaced as in that case it was dealing with Central Excise Notification Notification No.119/75 dated 30/4/1975. Thus as decided in CCE, Trichy v. Rukmani Pakkwell Traders (2004 (2) TMI 69 - SUPREME COURT OF INDIA it is impermissible to interpret one notification with the aid of another notification. It would therefore, be inappropriate to import definition of the job work given in excise notification No.119/75 dated 30/4/1975 while construing Customs Notification No.32/97/Cus. dated 1/4/1997. All that Notification requires is that there should be value addition of 10% or more in the exported product than the value of the goods imported. Further, the Notification nowhere provides that the benefit of Notification would not be available where any indigenous material is used in the manufacture of export product. As it is not permissible to either add or subtract words to exemption notifications as held in M/s. Hemraj Gordhandas v. H.H. Dave, ACCE & C, Surat and others(1968 (9) TMI 112 - SUPREME COURT OF INDIA) no denial to claim is warranted - in favour of assessee.

Summary

Issues:
Interpretation of Customs Act, 1962 - Application of Notification No.32/97/Cus. - Determination of job work activity - Requirement of value addition in exported products.

Analysis:
The appeal before the High Court of Bombay involved a dispute under Section 130A of the Customs Act, 1962, regarding the interpretation of Notification No.32/97/Cus. dated 1/4/1997. The main issue was whether the activity undertaken by the respondent constituted job work and if the value addition clause in the notification included the value of indigenous material used in the manufacturing of the final product exported.

The facts of the case revealed that the respondent, engaged in chemical manufacturing, entered into a job work contract with a foreign entity to manufacture pesticide formulation. The imported raw materials were exempted from customs duty under the aforementioned notification, subject to conditions including a 10% value addition requirement in the exported goods. The dispute arose when the Deputy Commissioner of Customs denied the exemption, citing the use of indigenous materials in the manufacturing process.

The Commissioner of Customs (Appeals) later allowed the respondent's appeal, emphasizing that the value addition exceeded the required percentage and distinguishing the case from a previous decision cited by the revenue. The Tribunal upheld this decision, noting the substantial value addition and rejecting the argument that the activity did not amount to job work.

During the appeal, the appellant contended that the activity could not be classified as job work due to the significant contribution of indigenous materials and the inability to meet the value addition requirement. However, the respondent argued that the Apex Court's decision cited by the appellant was inapplicable to the present case, and that the value addition condition was met.

The High Court analyzed the definitions and interpretations of job work under different notifications, emphasizing that the specific definition under the Central Excise Act did not apply to the Customs notification in question. The Court held that the value addition condition was fulfilled, and the use of indigenous materials did not disqualify the respondent from the exemption.

Ultimately, the Court ruled in favor of the respondent, affirming that the activity constituted job work and that the value addition condition was satisfied, as per the requirements of Notification No.32/97/Cus. dated 1/4/1997. The appeal was disposed of accordingly, with no order as to costs.