2002 (12) TMI 98 - HC - Central Excise

Summary

Issues:
1. Whether the activity of the petitioner constitutes manufacturing excisable goods under Section 3 of the Central Excise Act, 1944.
2. Validity of the demand notice issued by the Collector of Central Excise.
3. Relief sought by the petitioner in quashing the order dated 13th October, 1989.

Issue 1: Activity of the petitioner and Excisability:
The petitioner, a Civil Construction Company, was issued a show cause notice for allegedly manufacturing excisable goods without paying excise duty. The petitioner argued that the activity of assembling components supplied by another company and erecting a factory shed did not amount to manufacturing excisable goods. The respondent Collector relied on statements of the petitioner's officers and the payment of sales tax on the components. The petitioner contended that the goods were not excisable under Section 3 of the Central Excise Act, citing relevant judgments. The Court, in line with a previous judgment, accepted the petitioner's argument, ruling that the activity did not amount to manufacturing excisable goods under the Act.

Issue 2: Validity of Demand Notice:
The respondent Collector issued a demand notice based on recorded statements and sales tax payment by the petitioner. The petitioner challenged the validity of the notice, leading to the filing of the petition. The Court considered the arguments of both parties, including the concept of marketability in determining excisability. The Court referenced judgments to support the respondent's position but ultimately sided with the petitioner, holding that marketability was not a relevant factor in this context. Consequently, the Court quashed the order dated 13th October, 1989, in favor of the petitioner.

Issue 3: Relief Sought by the Petitioner:
The petitioner sought relief in quashing the order and requested the return of the deposited amount and the release of the Bank Guarantee. The Court granted the petitioner's request, allowing them to withdraw the deposited amount and releasing the Bank Guarantee. The respondent's request for a stay of the order for eight weeks was also considered, with the Court deciding to stay the judgment and order for the requested period. No costs were awarded in the case.

In conclusion, the High Court of Judicature at Bombay, in a judgment delivered by H.L. Gokhale, J., addressed the issues surrounding the excisability of goods manufactured by the petitioner and the validity of the demand notice issued by the Collector of Central Excise. The Court ruled in favor of the petitioner, quashing the order and granting the requested relief while staying the judgment for eight weeks.