1997 (6) TMI 33 - HC - Central Excise

Summary

Issues:
Validity of Trade Notice No. 230/88
Exemption claimed on goods manufactured on Job Work Basis
Classification list approval by Assistant Collector
Dispute over benefits under Notification No. 175/86

Analysis:
The petitioner, a Small Scale Industrial Unit manufacturing machine parts, challenged Trade Notice No. 230/88 and the order by the Assistant Collector disallowing exemption claimed on goods manufactured on Job Work Basis. The petitioner qualified for concessional duty rates under Notification No. 175/86. The issue arose when the petitioner submitted a classification list seeking benefits for goods manufactured on Job Work Basis, leading to a show cause notice disallowing the concessional rates based on Trade Notice No. 230/88. The Assistant Collector approved the list but denied the exemption for Job Work Basis goods supplied by principal manufacturers BHEL and BEML. The petitioner contested this decision based on the Trade Notice and subsequent clarifications.

Trade Notice No. 230/88 stipulated that job workers are not entitled to exemption if inputs are supplied by principal manufacturers, as per the Assistant Collector's order. The decision relied on the Trade Notice's interpretation that job workers supplied with inputs by principals do not qualify for exemptions. However, subsequent clarifications by the Government emphasized determining the genuineness of the job worker to grant exemptions. The clarification highlighted that if the job worker operates on a Principal to Principal basis, they are eligible for exemptions under Notification No. 175/86.

The Court noted that the Assistant Collector's decision was based on Trade Notice No. 230/88, which did not differentiate between genuine and dummy job workers. The petitioner argued that they were not a dummy unit, but the Court found the decision valid as of July 1990. However, in light of the subsequent Trade Notice No. 159/90 emphasizing the genuineness of the job worker, the Court directed the Assistant Collector to re-examine the classification list approval request in line with the new notice. The Assistant Collector was instructed to reconsider the petitioner's case within three months, annulling the previous order and related show cause notices.

In conclusion, the judgment quashed the Assistant Collector's order and directed a fresh examination based on the updated Trade Notice, focusing on the genuineness of the job worker to determine eligibility for exemptions under Notification No. 175/86.