1989 (7) TMI 250 - AT - Central Excise

Summary

Issues: Classification under Central Excise Tariff, Benefit of Notification No. 119/75-C.E., Applicability of job work definition

In this case, the appellants received duty paid kraft paper to manufacture corrugated board and boxes on a job work basis. The kraft paper was classifiable under Tariff Item 17, while the manufactured products were assessable under Item 68 of the Central Excise Tariff. The appellants claimed the benefit of Notification No. 119/75-C.E., which exempted goods manufactured as job work from excess excise duty. However, authorities denied this benefit, stating that new articles emerged after manufacturing, making the entire value taxable. The Collector (Appeals) supported this view, stating it was not a typical job work scenario where the same product is returned post-manufacturing. During the hearing, the respondent argued that the value of materials should be included for excise duty calculation as the kraft paper underwent a complete change. The respondent cited the Madras High Court judgment in Madura Coats Ltd. v. Superintendent of Central Excise, emphasizing loss of identity during manufacturing process negates the Notification benefit. The Tribunal's Larger Bench decision in National Organic Chemical Industries Ltd. v. Collector of Central Excise further supported this stance by considering primary manufacturing processes producing different articles ineligible for Notification benefits.

The appellants cited the Bombay High Court judgment in The Indian Hume Pipe Company Ltd. v. Union of India, which held that Notification No. 119/75-C.E. applies even if the end-product differs from the initial material in job work scenarios. However, the Tribunal chose to follow the Madras High Court judgment and the Larger Bench decisions, emphasizing the emergence of distinct products, corrugated board, and boxes from the supplied kraft paper. The Tribunal concluded that the manufacturing process was primary, aligning with the precedent set in Atma Steels Pvt. Ltd. v. Collector of Central Excise, Chandigarh, and Others. Consequently, the Tribunal upheld the lower authorities' orders, dismissing the appeal based on the lack of justification to interfere, given the primary manufacturing nature and emergence of different products from the supplied material.