1984 (11) TMI 64 - HC - Central Excise

Summary

Issues:
Interpretation of an exemption notification under the Central Excise Rules, 1944.
Rejection of classification list and refund applications by the Assistant Collector of Central Excise.
Validity of the interpretation by Excise authorities regarding the exemption notification.
Refund of excise duty paid under protest and recovery of amounts claimed.

Detailed Analysis:
The judgment delivered by S.P. Bharucha, J. of the High Court of Judicature at Bombay pertains to the interpretation of an exemption notification issued under the Central Excise Rules, 1944. The notification, dated 30th April, 1975, exempts goods manufactured in a factory as a job work from excise duty, based on the amount charged for the job work. The petitioners received raw materials from a company, subjected them to a manufacturing process, and returned the final product to the company after charging for the job work done. However, the Assistant Collector rejected their classification list and refund applications, citing reasons related to the interpretation of the notification.

The petitioners, unaware of the exemption initially, paid full excise duty on the manufactured product. Upon becoming aware of the notification, they filed a classification list and refund applications, which were subsequently rejected by the Assistant Collector. The rejection was based on the belief that the exemption applied only if the article received and returned by the job worker remained the same, a view contested by the petitioners citing a Trade Notice clarifying otherwise.

The High Court, referring to a judgment by the Gujarat High Court, emphasized that the exemption notification aims to exempt job workers from duty on the value of the article as it leaves the factory, charging only for the job work done. The Court criticized the Excise authorities' interpretation, noting the inconsistency with the Trade Notice issued by them. The Court held that the interpretation applied by the Assistant Collector was incorrect, leading to the quashing of the rejection orders and directing refunds of excise duty paid under protest.

In conclusion, the High Court set aside the orders rejecting the classification list and refund applications, directing the Excise authorities to refund the claimed amounts and the excise duty paid under protest. The Court also ordered the respondents to pay the petitioners' costs and instructed compliance with the ruling within a specified timeframe.