TMI Blog1980 (12) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the diamonds in gold. It returns the diamonds and gold received from M/s. Bapalal and Co. (Diamonds) in the form of diamond jewellery such as necklaces, ear studs and nose screw. The petitioner in return receives labour charges from M/s. Bapalal and Co. (Diamonds). Similarly, the petitioner does job work for private customers who supply the petitioner with diamonds and gold and charges them for the manufacture of the jewellery. Apart from the job work that is done by the petitioner for M/s. Bapalal and Co. (Diamonds) and private customers, it receives gold ornaments and silverwares manufactured in workshops situated in Bombay, Calcutta, Coimbatore, Delhi, Kanwar, Mangalore, Marmagoa, Kumbakonam etc. and affixes its seal on these ornaments and then sells them in the open market. Admittedly as on 28-2-1975, the petitioner had a factory which was power operated one, employing more than 20 workmen. In view of the fact that the petitioner's manufactory fell within the meaning of `factory' the articles of jewellery manufactured by the petitioner became assessable to excise duty. 2. The Central Excise Tariff Item No. 68, reads as follows :- "68. All other goods not elsewhere speci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and silverware manufactured outside and sold by the petitioner, the third respondent held that such articles were manufactured by the petitioner. Against the said order the petitioner preferred an appeal to the Appellate Collector of Customs and Central Excise, Madras. The appeal was dismissed by the Appellate Collector, the second respondent herein, on 27-10-1976. The Appellate Collector took the view that the petitioner firm and M/s. Bapalal and Co. (Diamonds) had common partners. Though two licences were issued in 1963 under the Gold (Control )Act, later there was only one common licence under the Gold (Control) Act and another licence under the Central Excise Act. Further, there was unity of management and control and that the petitioner firm was part and parcel of M/s. Bapalal and Co. (Diamonds). As regards the other items of gold jewellery and silverware, the second respondent took the view that such items were being manufactured by the petitioner in view of the fact the seal of the petitioner was affixed on those articles. The petitioner filed a further revision before the Government of India which was also dismissed on 25-2-1978. The revision authority took the view that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both diamond and gold for being coverted into jewellery, the respondents have admitted that only diamonds are supplied by the said firm to the petitioner and that the gold belongs to both. In the order passed by the respondents as well as in the counter affidavit filed in this court one of the contentions taken is that no manufacturing process is involved in the act of cutting and setting diamonds in gold and converting them into diamond necklaces or ear-stud or nose screw. It is not possible to accept this contention. Admittedly diamonds in crude form are handed over by M/s. Bapalal and Co. (Diamonds) to the petitioner firm. The said diamonds are cut, set in gold and converted into diamond jewellery such as necklaces, ear-studs and nose-screws. The articles of diamond jewellery that are manufactured by the petitioner are entirely different articles and have no identity with the crude diamond which was originally handed over to the petitioner. As a matter of fact, Mr. Balasubramanian, the learned Standing Counsel for the respondents, did not take the contention before me that the diamonds supplied by M/s. Bapalal and Co. (Diamonds) do not undergo any manufacturing process at the h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amonds) to the petitioner is not only diamond in crude form but also gold. The petitioner merely applies its labour and converts them into diamond jewellery for which act of conversion it receives labour charges from M/s. Bapalal and Co. (Diamonds). No attempt has been made by the respondents to show that the petitioner firm is not only billing for the labour charges for the job work done by it, but also for the value of the gold used in the making of the diamond jewellery. It therefore follows that in converting the diamond into diamond jewellery the petitioner is only doing a job work as is contemplated under Notification No. 119 of 1975. Hence the petitioner is entitled to the benefit of the notification. 9. The next question for consideration is whether the gold jewellery and silverwares purchased by the petitioner firm from outside dealers and stamped with its marking and sold will attract excise duty. It is not in dispute that so far as these items of jewellery are concerned, the petitioner firm purchases them from manufacturing in Bombay, Calcutta, Coimbatore, Delhi, Kanwar, Mangalore Marmagoa, Kumbakonam etc. The petitioner firm then stamps those jewellery with its own se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are incidental or ancillary not the manufacturing process but to the process of sale of the end product would not fall within the definition of `manufacture' appearing in clause (f) above extracted. Thus the mere transfer of the end product into containers which can be handled conveniently, the sealing of such containers with the object of preservation of the end product and ensuring that they would not be subjected to adulteration easily and of putting marks or labels on the containers with the object of identifying the end product and enhancing the goodwill of the manufacture would not form part of manufacture. In this view of the matter, the fact that Sec. 13 of the Fertilizer (Control) Order, 1957 enjoins a particular type of packing for the fertiliser before it is sold and the stage at which excise duty shall be collected on fertilisers are wholly irrelevant for they do not determine whether packing is a process of manufacture. This interpretation finds support from the judgment in Amar Dye Chem. Ltd., Bombay v. Union of India, Spl. C.A. No. 2070 of 1963, dated 18-1-1965 decided by Chainani, C.J. and Gonala, J. of the Bombay High Court. In the result I hold that the goods i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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