1987 (10) TMI 63 - HC - Central Excise

Summary

Issues:
1. Whether the petitioner is entitled to exemption from the payment of excise duty on the goods manufactured by them as per Notification No. 197/67-C.E.?
2. Whether the detonators in which the products of the petitioner are used can be considered machinery for the purpose of exemption from excise duty?
3. Whether the products of the petitioner are similar to those of another manufacturer who was granted exemption from duty under the same notification?

Analysis:
Issue 1:
The petitioner, a public limited company engaged in manufacturing rubber goods, sought exemption from excise duty on rubber tubing and sleeving used in detonators, claiming coverage under Notification No. 197/67-C.E. The petitioner's representation for exemption was rejected by various authorities. The petitioner argued that their products fell within the notification's scope and highlighted exemption granted to a similar manufacturer. The respondent, in their affidavit, disputed the exclusivity of the petitioner's products for detonators and contended that detonators do not qualify as machinery under the notification. The court, after considering definitions of machinery and detonator, concluded that detonators can be considered machinery, entitling the petitioner to exemption. The court found no valid reason to deny the petitioner's claim and ruled in favor of the petitioner, quashing the previous orders and directing exemption from duty.

Issue 2:
The crucial point of contention was whether detonators, in which the petitioner's products were used, could be classified as machinery under the notification. The court analyzed definitions of machinery and detonator from dictionaries to ascertain their nature. It concluded that detonators, being contrivances causing explosions, could be categorized as machinery. The court criticized the lack of reasoning in previous orders and affirmed that the petitioner's products, integral to detonators, were covered by the notification, warranting exemption from excise duty.

Issue 3:
The petitioner argued that their products were similar to those of another manufacturer, Basant Rubber Factory, which had received duty exemption under the same notification. The respondent's affidavit denied the similarity without providing substantial reasoning. The court noted the lack of specific denial regarding the similarity of products and emphasized that naming differences did not alter the nature of the goods. By interpreting the definitions of machinery and detonator, the court determined that the petitioner's products qualified for duty exemption, akin to the other manufacturer. Consequently, the court granted relief to the petitioner, emphasizing the entitlement to exemption based on the notification's provisions.