1994 (1) TMI 106 - HC - Central Excise

Summary

Issues Involved:
1. Validity of the impugned notices issued by the Central Excise authorities.
2. Applicability of Notification No. 119/75-C.E., dated 30-4-1975.
3. Determination of excise duty liability based on job work charges.
4. Limitation under Section 11A of the Central Excises and Salt Act, 1944.

Detailed Analysis:

1. Validity of the Impugned Notices:
The petitioner challenged the notices dated 23-11-1979, 22-5-1980, 20-2-1981, and 20-3-1982 issued by the Central Excise authorities, arguing that they were not liable to pay excise duty on the total value of the goods but only on the job work charges. The court noted that the Assistant Collector had not determined the issue and continued to raise demands, leading to the filing of the writ petition. The court overruled the respondents' objection, stating that remanding the case back to the Assistant Collector would not be a sound exercise of discretion given the lapse of about 12 years.

2. Applicability of Notification No. 119/75-C.E., dated 30-4-1975:
The court examined whether the petitioner was entitled to the benefit of Notification No. 119/75-C.E., which exempts goods manufactured on a job work basis from excise duty beyond the job work charges. The court emphasized that the notification's explanation does not stipulate that the article should not acquire a different identity post-manufacturing. The court concluded that the rails supplied by the Railway Board to the petitioner, which underwent minor processing and were returned, did not lose their identity and thus fell within the scope of the notification.

3. Determination of Excise Duty Liability Based on Job Work Charges:
The court held that the petitioner was liable to pay excise duty only on the job work charges and not on the total value of the goods. The court supported this view by referencing several judgments from various High Courts, including the Gujarat High Court in the case of M/s. Anup Engineering Ltd. v. Union of India, which interpreted the notification to mean that duty is payable only on job work charges.

4. Limitation under Section 11A of the Central Excises and Salt Act, 1944:
The petitioner argued that a large part of the claim was beyond the six-month limitation period specified in Section 11A of the Act. However, the court did not express an opinion on this matter, as it had already decided the main issue in favor of the petitioner.

Conclusion:
The court allowed the writ petition, quashing the impugned notices and the demand raised by the respondents. The petitioner was held entitled to the benefit of Notification No. 119/75-C.E., thereby liable to pay excise duty only on the job work charges and not on the total value of the goods.