1998 (2) TMI 137 - HC - Central Excise

Summary

Issues Involved:
1. Whether the activity of putting duty-paid manufactured items and duty-paid brought-out items in one kit and packing them amounts to manufacture u/s 2(f) of the Central Excise Act, 1944.
2. Validity of the circular issued by the Central Board of Excise and Customs declaring the process as manufacture.
3. Jurisdiction of the High Court to entertain the writ petition under Article 226 of the Constitution of India despite the availability of an alternative remedy.

Summary:

Issue 1: Whether the activity amounts to manufacture u/s 2(f) of the Central Excise Act, 1944
The petitioners argued that the activity of putting duty-paid manufactured items in a kit does not amount to manufacture as no process is involved in the said activity. The respondents contended that putting different items together and supplying them as a kit amounts to manufacture since a new and distinct product, known as a cable jointing kit, comes into existence. The court referred to the definition of "manufacture" and various Supreme Court judgments, concluding that mere assembly of items into a kit does not transform them into a new product with a distinct name, character, or use. Therefore, the activity does not amount to manufacture u/s 2(f) of the Act.

Issue 2: Validity of the Circular
The circular issued by the Central Board of Excise and Customs declared that the process of assembling cable jointing kits amounts to manufacture and thus liable for excise duty. The court found that since the activity does not amount to manufacture, the circular is without authority of law. Consequently, the notice proposing to levy duty on cable jointing kits pursuant to the impugned circular is also without authority of law and jurisdiction.

Issue 3: Jurisdiction of the High Court under Article 226
The respondents argued that the petitioners should approach the Departmental authorities as they have an effective alternative remedy. The court held that when the action of the Revenue is without authority of law, the High Court is not precluded from exercising its jurisdiction under Article 226 of the Constitution of India. The court emphasized that the petitioners need not subject themselves to an authority that has no jurisdiction over them.

Conclusion:
The court concluded that the activity of assembling cable jointing kits does not amount to manufacture, the circular issued is without authority of law, and the High Court has jurisdiction to entertain the writ petitions. Consequently, the writ petitions were allowed with costs.