1989 (8) TMI 171 - AT - Central Excise

Summary

Issues: Interpretation of Notification 119/75 regarding duty exemption for job work.

Detailed Analysis:
1. The appeal was filed by the Collector of Central Excise, Bombay-I against an order setting aside a previous order denying duty exemption to respondents who manufactured toothbrushes on a job work basis. The dispute revolved around the interpretation of Notification No. 119/75, dated 30-4-1975, which provided duty exemption for goods manufactured in a factory as job work.

2. The Departmental Representative argued that the job work done by the respondents did not meet the criteria set by a Larger Bench decision in the NOCIL case. The Tribunal in NOCIL had distinguished between primary and secondary manufacture, stating that the manufactured product should be given by the customer to the job worker and returned after additional manufacturing processes. The department contended that the toothbrushes made by the respondents were entirely different from the materials received, thus not qualifying as job work under the notification.

3. The respondents' counsel countered that the operations carried out by the respondents constituted job work as the identity of the toothbrush was retained after processing. They cited various court judgments supporting their stance, including those from the Bombay High Court. Additionally, they suggested following the valuation principles laid down by the Supreme Court in the Ujagar Prints case if the decision went against them.

4. The Tribunal analyzed the Notification 119/75 and the principles established by the Larger Bench in the NOCIL case. The Tribunal emphasized that job work under the notification involved incidental or ancillary processes leading to the completion of the manufactured product. In this case, the respondents received raw materials from the customer and produced fully finished toothbrushes, which were distinct from the materials received. Therefore, the Tribunal concluded that the respondents' manufacturing process amounted to primary manufacture, not job work as per the notification. The impugned order was set aside, and the department's appeal was allowed. The Tribunal also directed the department to consider the valuation principles from the Ujagar Prints case for future reference.

This detailed analysis provides a comprehensive overview of the legal judgment, focusing on the interpretation of Notification 119/75 and the application of relevant court decisions to determine the eligibility for duty exemption in a job work scenario.