1978 (11) TMI 72 - CGOVT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 119/75-C.E. regarding excise duty exemption for job workers.
2. Discrepancy between the Government of India's decision and the court judgments.
3. Lack of consistency and clarity in the application of excise duty exemptions.

Analysis:
The judgment by the Government of India addressed the interpretation of Notification No. 119/75-C.E. concerning excise duty exemption for job workers. The Government observed that the exemption could not be extended to job workers if the raw material supplied to them resulted in a new and different product after processing. The Government emphasized that the article sent to the job worker must be the same as the one returned after manufacturing, which was not the case for the petitioner. Consequently, the supplier's application was rejected based on this interpretation.

The Editor's Comments criticized the Government's decision, highlighting that excise duty is applicable only when a new product emerges from the manufacturing process. The Editor referenced a Divisional Bench of the Gujarat High Court's judgment in Anup Engineering Ltd. v. Union of India, which supported the view that the exemption should apply even if the raw material transforms into a new product at the job worker's hands. The Editor pointed out the Government's failure to align with court judgments, leading to inconsistency and confusion in the application of excise duty exemptions.

Moreover, the Editor emphasized the importance of consistency and clarity in the application of excise duty exemptions. The Editor noted that the Government's decision contradicted its own communication to the trade, stating that the goods' nomenclature need not remain the same before and after processing to claim exemption under Notification No. 119/75. The lack of uniformity in interpreting the law was criticized for creating uncertainty, harassing the trade, and potentially fostering corruption among field staff. The Editor underscored the need for authorities to provide transparent reasoning when differing from court judgments to avoid confusion and ensure fair application of excise duty exemptions.