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1997 (1) TMI 113 - SC - Central Excise
Issues:
Assessment of duty payable on connecting rods manufactured by job work; Interpretation of exemption notification dated 1st March, 1979; Computation of value for excise duty purposes. Analysis: The case involved a dispute regarding the assessment of duty payable on connecting rods manufactured through job work. The respondents, a small scale industry, processed forgings supplied to them into connecting rods of different sizes. The raw material underwent various processes to emerge as finished connecting rods. The respondents claimed exemption under a notification dated 1st March, 1979, subject to certain conditions. The issue arose when the Assistant Collector informed the respondents that the value of raw materials plus job charges had to be considered for duty liability calculation, a stance disputed by the respondents. The High Court directed the authorities to determine the exemption eligibility based on job work charges only. The Union of India appealed against this direction. The Supreme Court clarified that since the Excise authorities had not adjudicated on the exemption conditions, the High Court's directive was premature. The Court emphasized that the authorities must determine the value for excise duty payment when job work involves processing forgings into finished products like connecting rods. The Court modified the High Court's order, instructing the authorities to determine the value as per established legal principles before considering the exemption application. The decision highlighted the need for adherence to legal precedents in value determination for excise duty purposes. In conclusion, the Supreme Court disposed of the appeal with modifications, emphasizing the importance of determining the value correctly for excise duty assessment in cases involving job work processing. The judgment underscored the necessity of following legal principles in such assessments and directed the authorities to apply the law as explained by previous court decisions.
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