1973 (2) TMI 54 - HC - Central Excise

Workers - Criteria for determination of number of workers - Connotation of - Notifications and Trade Notices - Canons of interpretation

Issues Involved:
1. Definition of "Factory" under Section 2(e) of the Central Excises and Salt Act, 1944.
2. Interpretation of "Worker" under the Notification dated April 18, 1955, read with the Trade Notice dated May 2, 1958.
3. Applicability of Excise Duty on electric batteries manufactured by the petitioner company.
4. Validity of the order dated April 3, 1965, and the demand notice dated July 2, 1965.

Detailed Analysis:

1. Definition of "Factory" under Section 2(e) of the Central Excises and Salt Act, 1944:

The trial court held that the term "Factory" as defined under Section 2(e) of the Act includes the whole of the ground floor of Shree Pant Bhavan. However, the appellate court found it unnecessary to decide on this finding, noting that the petitioner company did not accept the correctness of this view. The court proceeded on the assumption that the entire ground floor constituted a factory within the meaning of the Act.

2. Interpretation of "Worker" under the Notification dated April 18, 1955, read with the Trade Notice dated May 2, 1958:

The Notification dated April 18, 1955, exempted electric batteries produced in any factory employing not more than five workers from excise duty. The Trade Notice dated May 2, 1958, clarified that the term "worker" should be interpreted as per Section 2(1) of the Factories Act, 1948. The trial court ruled that "workers" should refer only to those employed in the manufacturing process of excisable goods, i.e., batteries. The appellate court agreed with this interpretation, rejecting the broader definition argued by the Excise Authorities that included all workers engaged in any manufacturing process within the premises.

3. Applicability of Excise Duty on electric batteries manufactured by the petitioner company:

The Excise Authorities contended that all workers employed in any manufacturing process within the premises should be counted to determine the applicability of the exemption. They argued that the petitioner company was liable for excise duty as the total number of workers exceeded five when including those involved in motor car repairs and recharging batteries. The appellate court disagreed, stating that only workers involved in the manufacturing process of excisable goods (batteries) should be considered. Since no more than four workers were employed in the battery assembling section, the company was entitled to the exemption.

4. Validity of the order dated April 3, 1965, and the demand notice dated July 2, 1965:

The trial court set aside the order dated April 3, 1965, and the demand notice dated July 2, 1965, and issued a Writ of Mandamus directing the return of the seized batteries without demanding excise duty. The appellate court upheld this decision, concluding that the Excise Authorities erred in their interpretation of the Notification and Trade Notice. Consequently, the batteries manufactured in the assembling section were exempt from excise duty, and the impugned order and demand notice were invalid.

Conclusion:

The appeal was dismissed with costs, affirming the trial court's decision that the petitioner company was entitled to exemption from excise duty under the Notification dated April 18, 1955, read with the Trade Notice dated May 2, 1958. The court emphasized the importance of interpreting "worker" and "manufacturing process" in the context of excisable goods, thereby limiting the scope to workers directly involved in the production of such goods.

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