2018 (11) TMI 18 - HC - Central Excise

Benefit of N/N. 36/2001 dated 26.06.2001 - appellant being the principal - Excisability/marketibility - match splints - Held that - It is admitted by the petitioners that they purchase duty paid machine made match splints, undertake the other jobs through third party job workers and then sell it to their customers. Accordingly, the petitioners always hold principal interest on the goods bought and processed and sold by them. Therefore, it follows that the match splints purchased by them being duty paid and machine made, the finished match bundles manufactured by the petitioners are liable to levy of central excise duty in terms of Sl.No.142 of Notification No. 12/2012 dated 13.03.2012 - The petitioners being principals and not job workers, the benefit of exemption contained in Notification No. 36/2001 dated 26.06.2001 is not applicable to them. Excisability/marketibility - match splints - Held that - The argument by the petitioners that the item covered under Chapter Heading 3605 0010 or 3605 0090 as matches is chemically dipped splints and not fully finished match bundles is without basis. Matches are marketed and ultimately consumed in boxes/bundles. The argument that since match splints are marketable and therefore held to be dutiable under Chapter 36 and therefore matches in bundles are not classifiable under chapter 36, is not tenable. Petition dismissed.

Summary

Issues:
Challenge to impugned orders directing to comply with Central Excise Act and Rules for packing matches without power aid, Exemption from levy of central excise duty, Classification of matches and packaging process, Applicability of previous court orders on job workers.

Analysis:
1. The petitioners, engaged in match manufacturing, challenged orders directing compliance with Central Excise Act for packing matches without power aid. They argued that they are outside the levy of central excise duty due to purchasing duty paid match splints and the job work processes not aided by power. They contended that the exemption from registration was wrongly denied without proper reasoning. The petitioners emphasized that their processes, being power-aid free, should be exempt from excise duty under the prevailing notification.

2. The respondents countered by stating that some petitioners already held registration certificates and that the finished match bundles were sold after processing by job workers. They referred to specific notifications to explain the applicability of exemptions and mentioned that previous court orders on job workers did not apply to the petitioners as they were principals, not job workers.

3. The court examined the relevant provisions of the Central Excise Act, notifications, and the nature of processes involved in match manufacturing. It clarified that excise duty is applicable if certain processes are carried out with power aid. The court emphasized that the petitioners, as principals, were liable for excise duty as they purchased duty paid match splints and processed them into finished match bundles for sale, contrary to the exemption claimed.

4. The court rejected the petitioners' arguments regarding the classification of matches and packaging processes, stating that the finished match bundles were dutiable under Chapter 36. It concluded that the petitioners, being principals, did not qualify for the exemption under the relevant notification. The court also noted that previous court orders on job workers did not apply to the petitioners.

5. Consequently, the court dismissed the writ petitions, upholding the impugned communications of the 5th respondent. The court found no infirmity in the orders and ruled against the petitioners, leading to the closure of the connected miscellaneous petitions without costs.