9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
1994 (9) TMI 66 - SC - Central ExciseWhether the benefit of Notification No. 119/75 dated April 30, 1975 can be claimed by the appellant? Held that - All that Modipon does is to supply steel pipes. The appellant purchases guide rings and strengthening rings from the market. It fits these rings into those steel pipes by itself or gets them fitted in another unit. Thereafter, adopters are fitted on the sides of the cops and then the plastic sleeves are fitted on the cylinders of the cops. This is not a case where the rings and the adopters and sleeves are supplied by Modipon. It is not suggested that the value of rings, adopters and sleeves is very small vis-a-vis the value of steel pipes. The additions made by the appellant are not minor additions; they are of a substantial nature and of considerable value. Except the pipes, all other items which go into the manufacture of cops are either purchased or procured by the appellant himself and he manufactures the cops out of them. The work done by him cannot be characterised as a job-work. If all the requisite rings, adopters and sleeves had also been supplied by Modipon, it could probably have been said that the appellant s work is in the nature of job-work. But that is not the case here. The Tribunal was, therefore, right in holding that the appellant cannot avail of the benefit of the Notification. The appeal accordingly fails and is dismissed. Civil Appeal Nos. 1384-85 of 1987 - It does not appear that the respondent adds any of his own material while manufacturing the transmitters and components as job work, the High Court was right in extending the benefit of the Notification to the respondent. Civil Appeal No. 3464 of 1988 - Tribunal has not clearly dealt with the process of manufacture undertaken by the appellant. It appears that the customer entrusts lead ingots to the appellant who manufactures lead suboxide and litharge from them. Whether the appellant adds any of his own material or whether the said manufactured products are made wholly or substantially from the material supplied by the customer is not clear from the judgment of the Tribunal. Thus remit the matter to the Tribunal for decision afresh according. Civil Appeal Nos. 19-22 of 1980 - The judgment of the Gujarat High Court too the process employed by the respondent is not clearly set out - matters remitted to the High Court for ascertaining the relevant fact. Civil Appeal No. 3331 of 1984 - The notification cannot be forced to operate in conditions it is not qualified to operate. In the case before us now, we have the added factor that acetic anhydride by Sirsilk is not known to be the product of the acetic acid brought by the particular customer, because Sirsilk uses this process for its own production programmes as well. The acetic acid first gets mixed with other acetic acid or the finished anhydride gets mixed with anhydrides obtained from other acetic acid. There is no segregation and therefore no one can tell that the acetic anhydride was the result of this or that acetic acid. Denial accepted. Civil Appeal No. 3963 of 1990 - The judgment of the High Court does not set out the relevant facts nor the manufacturing process undertaken by the respondent-writ petitioner - the appeal is allowed and the matter remitted to the High Court for looking into the relevant facts. Civil Appeal No. 2867 of 1991 - The respondent receives high density polythene fabric from its customers and prepares bags out of it. He also prints a logo or some other matter on the said bags as per the specification of the customer. The High Court of Bombay at Nagpur held that, in the above circumstances, the work done by the respondent-writ petitioner was in the nature of job work. We see no error in the reasoning of the High Court.
Issues Involved:
1. Interpretation of Notification No. 119/75-C.E. dated April 30, 1975. 2. Definition and scope of "job work" under the Notification. 3. Application of the Notification to various manufacturing processes. 4. Conflict of opinions among High Courts and CEGAT on the Notification's interpretation. Detailed Analysis: 1. Interpretation of Notification No. 119/75-C.E. dated April 30, 1975: The appeal raises a question regarding the true meaning and purport of Notification No. 119/75-C.E., which exempts goods produced on a job work basis from excise duty in excess of the duty calculated on the basis of the job work charges. The Notification defines "job work" as a process where an article supplied to a job worker undergoes a manufacturing process and is returned to the supplier after charging only for the job work done. 2. Definition and Scope of "Job Work" under the Notification: The Notification's explanation defines job work as a situation where an article intended to undergo a manufacturing process is supplied to the job worker and returned to the supplier after the process, charging only for the job work done. The term "manufacture" under Section 2(f) of the Act includes any process incidental or ancillary to the completion of a manufactured product. The appellant argued that the definition of "manufacture" should mean bringing into existence a new substance, and the process undertaken should be considered job work if the article is merely processed and returned. 3. Application of the Notification to Various Manufacturing Processes: - Case 1 (Appellant and Modipon Limited): The appellant received steel pipes from Modipon and added guide rings, strengthening rings, adopters, and plastic sleeves to manufacture cops. The Tribunal found that the process involved substantial additions by the appellant, making it a full-fledged manufacturing process rather than job work. The Supreme Court upheld this view, stating that the appellant's work could not be characterized as job work since the additions were substantial and not minor. - Case 2 (Precision Telecom Products): The Indian Telephone Industries supplied all materials required for manufacturing transmitters and components to the respondent. The Karnataka High Court extended the benefit of the Notification to the respondent, and the Supreme Court upheld this decision, noting that no additional materials were added by the respondent. - Case 3 (Lead Suboxide and Litharge Manufacturing): The Tribunal did not clearly ascertain whether the appellant added any of his own materials. The Supreme Court remitted the matter to the Tribunal for a fresh decision based on the facts and in light of this judgment's ratio. - Case 4 (Anup Engineering): The Gujarat High Court's decision was remitted for ascertaining the relevant facts and deciding according to the law in light of this judgment's ratio. - Case 5 (Sirsilk Ltd.): The Tribunal found that Sirsilk mixed customers' acetic acid with its own, making it a full-fledged manufacturing process. The Supreme Court upheld this finding, denying the benefit of the Notification. - Case 6 (High Density Polythene Bags): The respondent received high-density polythene fabric from customers and made bags, adding only minor materials like thread. The Bombay High Court held this to be job work, and the Supreme Court upheld this decision. 4. Conflict of Opinions among High Courts and CEGAT: - Calcutta High Court (Madura Coats Ltd.): Held that arranging yarn into tyre chord warpsheet did not amount to manufacture and even if it did, it was job work under the Notification. - Gujarat High Court (Anup Engineering): Held that job work includes processes where new articles emerge, provided the main material is supplied by the customer. - Madras High Court (Bapalal & Co.): Held that converting rough diamonds into diamond jewelry was job work. - Karnataka High Court (Precision Telecom Products): Held that manufacturing transmitters and components from materials supplied by ITI was job work. - Madras High Court (Madura Coats Ltd. - Different View): Held that if the materials supplied lose their identity and a new product emerges, the Notification's benefit is not available. - Special Bench of CEGAT (National Organic Chemical Industries Ltd.): Held that the Notification applies only to processes incidental or ancillary to the completion of the manufactured product. Conclusion: The Supreme Court clarified that the Notification aims to benefit small manufacturers undertaking job works by contributing mainly their labor and skill. The interpretation should not unduly curtail the Notification's scope but should focus on the nature of job work, even if minor materials are added. Each case must be examined based on whether the additions are substantial or minor to determine the applicability of the Notification.
|
