1988 (4) TMI 82 - HC - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 119/75-C.E. regarding exemption from Central Excise duty for job work.
2. Determination of whether the peeling of timber in log form by the petitioner constitutes 'manufacture' under Section 2(f) of the Central Excise Act.
3. Consideration of alternative remedy available to the petitioner before approaching the High Court.

Detailed Analysis:
Issue 1: The petitioner, a small scale unit, challenged impugned orders alleging contravention of Central Excise Rules regarding duty payment on cleared veneers. The contention was based on Notification No. 119/75-C.E., which stipulates duty charges only on the amount realized as job charges. The Assistant Collector held that the petitioner's work did not qualify as job work, leading to duty assessment. The High Court referred to a previous decision and concluded that the petitioner was indeed entitled to the exemption under the notification, emphasizing the specific criteria to be satisfied for such exemption.

Issue 2: The court examined whether the peeling of timber in log form by the petitioner constituted 'manufacture' under Section 2(f) of the Central Excise Act. Relying on a precedent, the court clarified that for an activity to be considered manufacturing, a new article with distinct characteristics must emerge. In this case, the court found that the petitioner's job did not amount to 'manufacture' as defined in the Act, thereby affirming the entitlement to the exemption under Notification No. 119/75-C.E.

Issue 3: The respondents argued that the petitioner should have pursued an alternative remedy before the appropriate authority instead of approaching the High Court directly. However, the court held that since the petitioner had established merit in the case and was entitled to the exemption, dismissing the petition based on the availability of an alternative remedy would be unjust. The court exercised its discretionary power to direct the refund of the duty illegally collected during the proceedings, emphasizing the importance of not relegating the petitioner to seek refunds through a different forum.

In conclusion, the High Court allowed the writ petition, quashed the impugned decisions, and directed the respondents not to levy excise duty on the petitioner's job work. The court ordered the refund of the duty collected during the case, highlighting the petitioner's entitlement to the exemption under Notification No. 119/75-C.E. The judgment emphasized the discretionary power of the court to ensure justice and prevent unnecessary reiteration of legal proceedings for rightful claims.