1980 (12) TMI 50 - HC - Central Excise

Summary

Issues Involved:
1. Whether M/s. Bapalal and Co. (Manufacturing) and M/s. Bapalal and Co. (Diamonds) are distinct entities.
2. Whether the petitioner is entitled to the benefit of Notification No. 119 of 1975.
3. Whether the gold jewellery and silverwares purchased from outside dealers and stamped with the petitioner's marking attract excise duty.

Summary:

1. Distinct Entities:
The court examined whether M/s. Bapalal and Co. (Manufacturing) and M/s. Bapalal and Co. (Diamonds) are distinct entities. It was established that both firms were registered separately under the Indian Partnership Act with different registration numbers and had different partners, though some were common. They were treated as separate entities for sales tax and income tax purposes. Despite holding a common licence under the Gold Control Act and the Central Excise Act, the court concluded that the two firms are independent of each other.

2. Benefit of Notification No. 119 of 1975:
The court considered whether the petitioner is entitled to the benefit of Notification No. 119 of 1975, which provides excise duty relief for job work. The essentials for this notification include the article being supplied for manufacturing, returned after processing, and the job worker charging only for the job work. The court found that M/s. Bapalal and Co. (Diamonds) supplied crude diamonds and gold to the petitioner, who then manufactured diamond jewellery. The court rejected the respondents' contention that no manufacturing process was involved and held that the petitioner was indeed performing job work as per the notification, thus entitled to the benefit.

3. Excise Duty on Purchased Jewellery and Silverwares:
The court addressed whether the gold jewellery and silverwares purchased from outside dealers and stamped with the petitioner's marking attract excise duty. It was established that these items were already in a manufactured state when received by the petitioner. The court referred to the definition of 'manufacture' u/s 2(f) of the Central Excises and Salt Act, 1944, and previous judgments, concluding that affixing the petitioner's seal was not incidental or ancillary to the completion of the manufactured product but was merely for identification and goodwill enhancement. Therefore, the petitioner was not liable to pay excise duty on these items.

Conclusion:
The writ petition was allowed, and the orders of the respondents were quashed without costs.