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Issues: Whether the assessee was entitled to the benefit of Notification No. 119/75-C.E. for goods fabricated on job-work basis from rails supplied free of cost by the Railways, so that excise duty was chargeable only on the job-work charges and not on the value of the supplied rails.
Analysis: Notification No. 119/75-C.E., issued under Rule 8 of the Central Excise Rules, 1944, exempted goods falling under Item 68 manufactured in a factory as job work from duty in excess of the duty calculated on the amount charged for the job work. The explanation required that the article be supplied by the customer, undergo the intended manufacturing process, and be returned to the supplier after job work is done. Reading the notification with Sections 3 and 4 of the Central Excises and Salt Act, 1944, the decisive question was whether the supplied rails ceased to be the same article for the purpose of the exemption. The Court accepted that the rails were supplied by the Railways for fabrication into points and crossings, that the assessee contributed mainly labour and processing, and that the addition of incidental fittings did not alter the character of the work so as to defeat the exemption.
Conclusion: The assessee was entitled to the benefit of the exemption notification, and excise duty was payable only on the job-work charges, not on the value of the supplied rails.
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