Case Note & Summary
The Petitioner, M/s Godrej Soap Ltd., filed a Writ Petition challenging an order dated 23.3.1989 passed by the Collector of Central Excise (Appeals) denying the benefit of exemption under Notification No.119/75 dated 30.4.1975. During the period 1977-1980, the Petitioner received tallow from the State Trading Corporation of India (STC) on job work basis and undertook the process of splitting it into fatty acid and glycerin. Similarly, the Petitioner received groundnut oil, coconut oil, and castor oil for job work, subjecting them to splitting or hydrogenation. The processed goods were returned to STC, and the Petitioner was paid only job charges. All these products attracted central excise duty under Item 68 of the erstwhile First Schedule to the Central Excise & Salt Act, 1944. The Central Government issued Notification No.119/75 exempting goods falling under Item 68 manufactured in a factory as a job work from duty in excess of the amount charged for the job work. The Collector denied the exemption, leading to the present petition. The Court considered whether the processes undertaken by the Petitioner amounted to manufacture and whether the goods were eligible for exemption. The Court held that the processes of splitting and hydrogenation constitute manufacture, and the goods were manufactured on job work basis as defined in the Notification. Therefore, the Petitioner was entitled to the exemption. The Court allowed the petition and set aside the impugned order.
Headnote
A) Central Excise - Exemption Notification - Job Work - Notification No.119/75 dated 30.4.1975 - The Petitioner undertook splitting of tallow, groundnut oil, coconut oil and hydrogenation of castor oil on job work basis for STC. The goods were returned to STC after processing. The Collector denied exemption on the ground that the process did not amount to manufacture. The Court held that the process of splitting and hydrogenation amounts to manufacture and the goods are eligible for exemption under Notification No.119/75, as the article supplied undergoes a manufacturing process and is returned to the supplier. (Paras 1-6)
Issue of Consideration
Whether the Petitioner is entitled to the benefit of exemption under Notification No.119/75 dated 30.4.1975 for goods manufactured on job work basis, where the goods are returned to the supplier after undergoing manufacturing process.
Final Decision
The Court allowed the Writ Petition and set aside the impugned order dated 23.3.1989 passed by the Collector of Central Excise (Appeals). The Petitioner is entitled to the benefit of exemption under Notification No.119/75 dated 30.4.1975.
Law Points
- Exemption notification
- job work
- manufacture
- duty on job charges
- Notification No.119/75
- Item 68
- Central Excise Act
- 1944
