1988 (2) TMI 68 - HC - Central Excise

Summary

Issues:
1. Validity of exemption Notification No. 41/81-C.E. dated 1-3-1981 under Rule 8(1) of the Central Excise Rules, 1944.
2. Interpretation of Rule 8(1) in relation to the power of exemption.
3. Whether the processes of box making, labelling, and bandrolling and packaging amount to manufacturing processes for the purpose of exemption.

Analysis:
1. The petitioner challenged the validity of exemption Notification No. 41/81-C.E. dated 1-3-1981 under Rule 8(1) of the Central Excise Rules, 1944, as amended by Notification No. 139/81-C.E. dated 2-7-1981. The petitioner argued that the power of exemption under Rule 8(1) should be limited to the process of manufacturing as stated in the impugned notification. However, the court held that Rule 8(1) does not prescribe such a limitation and confers wide discretionary powers on the Central Government to grant exemptions to excisable goods, including processes related to manufacturing.

2. The court emphasized that the power of exemption under Rule 8(1) can be exercised with reference to excisable goods, and the conditions imposed for exemptions should be consistent with the provisions of the Central Excises and Salt Act. The court cited the decision in Jayaprakash Match Works, Kovilpatti and Others v. Union of India and Others [1983 E.L.T. 58 (Madras)] to support the view that exemptions can be questioned only if they are contrary to the Act or the conditions imposed are irrelevant to the excisable item.

3. The petitioner contended that the processes of box making, labelling, and bandrolling and packaging do not amount to manufacturing processes for matches and, therefore, should not be exempted. However, the court held that even if these processes may not be strictly manufacturing processes, they could be essential for the disposal of finished matches and are not entirely irrelevant to the excisable item. The court rejected the argument that the exemption should be limited to manufacturing processes only and dismissed the writ petition.

In conclusion, the court upheld the validity of the exemption Notification No. 41/81-C.E. dated 1-3-1981, emphasizing the discretionary power of the Central Government under Rule 8(1) to grant exemptions to excisable goods, including processes related to manufacturing or disposal of finished goods.