1978 (12) TMI 53 - HC - Central Excise

Summary

Issues:
Interpretation of the term "shift" for calculating excise duty levy.

Analysis:

Issue 1: Interpretation of the term "shift" for calculating excise duty levy
The case involved a dispute regarding the interpretation of the term "shift" as mentioned in a Notification issued by the Government of India for the calculation of excise duty on embroidery machines. The Notification initially defined "shift" as a period of 8 hours duration, regardless of whether the machine was working for the full period or not. Subsequently, an amended Notification modified the definition of "shift" to mean a period not exceeding 8 hours, exclusive of rest intervals. The central issue was whether the petitioner factory operated in two shifts or three shifts based on the interpretation of the term "shift" in the Notifications.

The petitioner argued that the factory operated in two shifts as per the provisions of the Factories Act, which mandated specific work periods and rest intervals for workers. The petitioner contended that including the mandatory rest intervals, the total duration did not exceed 8 hours per shift. The court agreed with the petitioner's interpretation, emphasizing that the inclusion of rest intervals as required by law should not extend the shift duration beyond 8 hours for excise duty calculation purposes. The court found merit in the petitioner's submission and held that the demands made by the Department based on a three-shift calculation were incorrect.

The respondents attempted to justify the Department's interpretation by highlighting the petitioner's acknowledgment of providing rest intervals to employees. However, the court rejected this argument, noting that the petitioner had clearly outlined the shift timings and rest intervals in their submissions to the Excise authorities, which were not refuted. Consequently, the court ruled in favor of the petitioner, declaring the demands and decisions of the appellate authorities and Central Government as improper and in violation of the Notification.

In conclusion, the court held that the demands and decisions based on the erroneous calculation of shifts were illegal, quashing the demand notices and setting aside the appellate and governmental orders. The court ruled in favor of the petitioner, discharging the bank guarantee furnished by the petitioner-factory and absolving them from any costs incurred in the legal proceedings.