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Indian Steel Rolling Mills Ltd. Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)(14)ELT2396TriDel
AppellantIndian Steel Rolling Mills Ltd.
RespondentCollector of Central Excise
Excerpt:
.....not under dispute, the appellants received iron wires from m/s. india co. ltd. for converting into wire nails on job-work basis- both wires and nails falling under t.i. <58, the appellants converted the wire into wire nails and returned wire nails to india company pvt. ltd. charging only for conversion. it appears that the appellants at the time had availed of benefit of notification no. 119/75, dated 30-4-75. the excise authorities felt that conversion of wire into nails was full-fledged manufacturing activity out of which an entirely new article came into existence. this could not be called job-work. show cause notice dated 21-3-1979 was issued to the appellants calling upon them to show cause as to why duty should not be collected on the full value of wire nails without extending.....
Judgment:
1. The question for decision in this appeal originally filed as Revision application to the Government of India, is whether the appellants M/s. Indian Steel Rolling Mills Ltd., Madras are entitled to the benefit of job-work under Notification No. 119/75, dt. 30-4-1975 in respect of 'Nails' falling under T.I. 68 of C.E.T. made out of wires received from their customers and returned to them.

2. The appellants have been manufacturing Iron Products for long time by themselves or on job-work basis for others. For the material time, which is not clear but not under dispute, the appellants received Iron wires from M/s. India Co. Ltd. for converting into wire nails on job-work basis- both wires and nails falling under T.I. <58, the appellants converted the wire into wire nails and returned wire nails to India Company Pvt. Ltd. charging only for conversion. It appears that the appellants at the time had availed of benefit of Notification No. 119/75, dated 30-4-75. The Excise authorities felt that conversion of wire into nails was full-fledged manufacturing activity out of which an entirely new article came into existence. This could not be called job-work. Show Cause Notice dated 21-3-1979 was issued to the appellants calling upon them to show cause as to why duty should not be Collected on the full value of wire nails without extending the benefit of Notification No. 119/75. After following the usual procedure, the Assistant Collector, Central Excise, Pondicherry by his order dated 16-4-1979 held that the appellants could not be extended the benefit of Notification No. 119/75, as conversion of wire into wire nails could not be called job-work. He ordered payment of duty on full value on wire nails cleared by the appellants. The Appellate Collector of Central Excise, Madras by his order dated 27-8-1979 upheld the order of the Assistant Collector. Hence the present appeal.

3. In the grounds of appeal, it is mainly urged that the requirements of Notification No. 119/75 were fulfilled by the appellants. Wire was supplied to the appellant who were job-workers by Indian Company Pvt.

Ltd. The appellants manufactured nails out of wire and returned the same to the supplier. The orders passed by the lower authorities are not based on correct interpretation of the notification and appreciation of law.

4. At the hearing of the appeal, none appeared for the appellants. A communication was however received from Sh. P.S. Chakravarthy, appellants' representative requesting that in view of the distance and the expenditure involved and the fact that Notification No. 119/75 had been rescinded, none would appear at the hearing. Request was, however, made to dispose of the appeal on merits after taking into consideration points made out by the appellants in the grounds of appeal and their written submission.

5. Shri V. Lakshmikumaran, Senior Departmental Representative representing the respondent, in his argument stoutly defended the orders passed by the lower authorities. He submitted that appellants could get benefit of Notification No. 119/75-C.E., if M/s. India Co.

Pvt. Ltd. had supplied cut pieces of wire and not wire in running length as had been done in the present case, His contention was wire and nails are two entirely different articles. If nails made out of wire were returned to M/s. India Co. Pvt. Ltd. it cannot be said that the same article after job-work was returned to them. In their written submissions, the appellants have relied on a decision of Gujarat High Court in Anup Engineering Ltd. v. Union of India and Ors., 1978 ELT (J 533) and order of the C.B.E.C. dated 22-1-1981 reported in 1982 ELT 85.

6. In view of the available precedents, it is not necessary to discuss the issue involved in detail. The Gujarat High Court judgment in Anup Engineering Ltd.'s case (Supra) referred to Trade Notice issued by Bombay Collectorate (para 9 of the judgment) in which the Government of India had clarified that for claiming exemption under notification it was not essential that the articles received by the job-workers and the processed article returned by him should have the same description. So long as it can be shown that the job-worker was returning an article supplied to him after subjecting to manufacturing process, the exemption under Notification No. 119/75-C.E., dated 30-4-1975 would appear to be applicable irrespective of trade nomenclature of the article at the time of receipt of and at the time of despatch (after subjecting the due manufacturing process). The Gujarat High Court approved the Interpretation of the Notification as set out in this Trade Notice. In para 8 of the judgment, the High Court gave two illustrations of a Brass pot being made from a sheet of brass and suit being made of suit length and observed that to all these illustrations Notification No. 119/73 could be applicable. Central Board of Excise & Customs in Sam Smelting Pvt. Ltd., Meerut -order-in-appeal No. 7-B of 1981, dated 22-1-1981, 1982 ELT 85, took the same view in respect of Solder wore manufactured on job basis from out of tin and lead supplied by Indian Telephone Industries, Bangalore. In coming to this decision the Board, besides M/s. Anup Engineering's case (Supra), relied on a decision of Calcutta High Court in Madura Coats Ltd. v. Collector of Central Excise, West Bengal, 1980 ELT 582 (Calcutta).

In view of these decisions, there can be no doubt that the appellants in respect of wire nails made out of wire supplied by M/s. India Co.

Pvt. Ltd. and returned to them would get benefit of Notification No.119/75. As a result, the appeal is allowed and appellants granted the benefit of Notification No. 119/75 dated 30-4-1975, with consequential refund for the disputed .period.


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