1987 (3) TMI 203 - AT - Central Excise

Summary

Issues:
1. Interpretation of Notification No. 119/75-CE regarding duty exemption for job work.
2. Whether the manufactured capacitors and resistors are subject to full duty.
3. Application of the definition of job work under the notification.
4. Determination of whether the process resulted in the creation of new articles.
5. Compliance with excise duty regulations and relevant legal precedents.

Analysis:
1. The case involved a dispute regarding the duty charged by Central Excise on the total value of capacitors and resistors manufactured by M/s. Asian Electronics Ltd. The company claimed exemption under Notification No. 119/75-CE for job work done on raw materials supplied by customers for fabrication. The issue was whether the duty should be levied on the total value or only on the job work cost.

2. The counsel for M/s. Asian Electronics argued that the company fulfilled the conditions of job work under the notification by returning the processed materials to the customers. They cited various legal decisions to support their contention and challenged the Collector's decision to charge duty on the full value of the manufactured goods.

3. The company contended that the notification did not restrict job work to a specific meaning and that the return of the same material was not a requirement. They argued that the notification applied even if new articles emerged from the manufacturing process. The department, however, argued that the notification only applied if the same article was returned after job work.

4. The tribunal analyzed the manufacturing process of capacitors and resistors by M/s. Asian Electronics. It concluded that the transformation of raw materials into capacitors and resistors resulted in the creation of new articles with distinct names, characters, and uses. This transformation indicated that duty must be levied on the entire value of the goods.

5. Relying on the Supreme Court's ruling in the DCM case, the tribunal emphasized that duty must be paid on new articles created through manufacturing processes. The court clarified that every change in an article does not constitute manufacturing, but if a new and different article emerges, duty must be paid on its entire value. The tribunal set aside the Appellate Collector's order and directed the payment of duty on the manufactured goods based on the legal principles discussed.

In conclusion, the judgment clarified the interpretation of job work under Notification No. 119/75-CE and established that duty must be paid on new articles created through manufacturing processes. The decision highlighted the importance of distinguishing between raw materials and finished products for excise duty assessment.