TMI Blog1988 (5) TMI 171X X X X Extracts X X X X X X X X Extracts X X X X ..... on was granted to the respondent company that subject to the condition and procedure outlined in Rule 173-H of Central Excise Rules, 1944 and Collector s Notification No. 5-CE/70, dated 7.3.1970 to bring the defective duty paid vials rejected by M/s. IDPL and take out equivalent number of vials without payment of duty in terms of Rule 173-H. In order to appreciate the controversy in the proper perspective it is appropriate to extract at this stage some of the relevant portions from the respondent company s letter dated 22/30.4.1976 :- To summarise the position we wish to submit as under :- (1) Upto December 1975, we have made glass vials only and our entire production has been supplied to the Antibiotics Plant of the IDPL. This plant is a wholly owned unit of the Govt. of India. (2) As per the terms of our contract, Central Excise and any other Government levies are to be borne by them. (3) We are supplying vials, duly packed in cardboard boxes, - each box containing 1000 X 7.5 cc vials. 15 c.c. vials are packed in cardboard boxes containing 800 Nos. (4) The Antibiotics Plant of the Indian Drugs Pharmaceuticals Ltd. Virbhadra-Rishikesh, when using these vials (for pack ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny bag will determine the number of glass vials returned to them by M/s. IDPL. The condition regarding identity of goods received and those re-dispatched after re-making has also been waived off. A few other conditions such as 24 hours notice regarding receipt of rejected vials from M/s. IDPL into the respondents factory, storage of goods separately and all other collateral evidence to be made available to the Central Excise Officers etc. on demand were also imposed while allowing the benefit of Rule 173-H. 3. Notification No. 199/76 dated 26.6.1976 amended Rule 173-H which permitted retention or receipt of duty paid goods in the factory for the purpose of refining, reconditioning, repairing, remaking or subjected to any similar process in the factory in the following manner :- 173H(2) - the goods retained in, or brought into, a factory......... may, if not subjected to any process amounting to manufacture be removed from the factory............ without payment of duty............ [Amendment underlined). 4. The department has now alleged that the process adopted by the respondent company is nothing but a process amounting to manufacture, since the respondent company has re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 6. In view of the above findings of the Collector (Appeals) department has filed appeals to the Tribunal reiterating the contention/findings of the original authority as set out earlier. The appeal in addition refers to a 30% manufacturing loss in the raw material by way of broken/rejected vials fed into the furnace vis-a-vis output of finished goods out of such raw material. In other words, the contention is that the respondent company at best could clear only 70% of the rejected/broken vials received into the factory for the purpose of remaking etc. under Rule 173-H and therefore, an excess quantity to the extent of 30% was cleared by the respondent company without payment of duty. 7. Learned SDR Smt. Nisha Chaturvedi appearing for the appellant-Collector has reiterated the grounds of appeal set out above. 8. Learned Advocate for the respondents Miss Indu Malhotra has now urged that the respondent company had been following the procedure under Rule 173-H after taking the permission of the department. The permission was given in December 1976 when the Rule 173-H had already been amended in June 1976. The department cannot, therefore, now turn back and demand duty on the go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s which would not be the intention of the rule making authority. We observe that there is an ambiguity in Rule 173-H itself insofar as it allows in sub-rule (1) retention or receipt of duty paid goods which need to be re-made and yet in sub-rule (2) it allows clearance of such goods from the factory or warehouse without payment of duty after subjecting them, inter alia, to the process of re-making, refining, reconditioning etc. provided such process does not amount to manufacture. The word manufacture means (Chambers Twentieth Century Dictionary)" to make, originally by hand, now usually, by machinery and on a large scale: to fabricate, concoct: to produce unintelligently in quantity". In other words, the term remaking necessarily means the manufacture of the same product from the duty paid goods. Ambiguity, therefore, lies in the fact that what has been permitted in sub-rule (1) of Rule 173-H has been disallowed by sub-rule (2) thereof. Yet the rule is general in character and does not limit itself to any specific commodities; nor Is there any enabling power with any authority to limit the said rule to any specific commodity. Now it is a well settled principle of law that If ..... X X X X Extracts X X X X X X X X Extracts X X X X
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