1985 (12) TMI 61 - HC - Central Excise

Summary

Issues involved: Classification of glass beads for excise duty exemption under a notification.

Summary:
The petitioners manufactured glass beads used as chatons in artificial jewelry and had exemption until 1977. However, in 1978, excise authorities claimed excise duty on the beads. The Assistant Collector initially confirmed exemption but later, the Collector issued a show cause notice for non-payment of duty. The petitioners contended that their articles were indeed glass beads eligible for exemption.

The Central Board of Excise and Customs discussed the classification of glass chatons and concluded that they were not eligible for exemption as glass beads under the notification. A trade notice was issued stating that glass chatons needed to be pierced to be called beads. The petitioners challenged the show cause notice, subsequent letters, and circulars.

The court noted conflicting views on whether piercing was necessary for an article to be classified as a glass bead. The court considered definitions of a bead from various sources and found no requirement for piercing to be essential. The court emphasized that the petitioners' articles were indeed glass beads entitled to exemption under the notification.

The court highlighted a previous case where similar contentions were raised by Excise authorities but were decided against them. Ultimately, the court ruled in favor of the petitioners, making the petition absolute and ordering the respondents to pay the petitioners' costs.