Job-work exemption for supplied rails: duty applies only on processing charges when goods are processed and returned to the customer.

Notification No. 119/75-C.E. applied to rails supplied free of cost by the Railways for fabrication into points and crossings, because the exemption covered job work where an article is supplied by the customer, processed, and returned after the intended manufacture. The court treated the decisive features as customer supply and return after processing, and held that the article need not retain identical commercial identity or nomenclature throughout. On the admitted facts, the rails were only modified and returned for their intended use, so duty was payable only on the job-work charges and not on the full value of the goods. The limitation objection under Section 11A was not decided.

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Issues: Whether Notification No. 119/75-C.E. applied to rails supplied free of cost by the Railways for fabrication into points and crossings, so that excise duty was payable only on the job-work charges and not on the value of the supplied rails.

Analysis: The exemption notification covered goods falling under Item 68 manufactured as job work where an article is supplied to the job worker, subjected to the intended manufacturing process, and returned to the supplier on charging only for the job work done. The decisive features were supply of the article by the customer and its return after the intended process. The notification did not require that the article must retain the same commercial identity or nomenclature throughout. On the admitted facts, the rails were supplied by the Railways, subjected to fabrication and allied processing, and returned for their intended use. The Court held that the rails remained the same article with only a minor modification and that the exemption was meant to grant relief to such job workers. The limitation objection under Section 11A was not decided because the main issue itself was answered in favour of the petitioner.

Conclusion: Notification No. 119/75-C.E. was applicable, and the petitioner was entitled to pay duty only on the job-work charges, not on the total value of the goods.

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