Tribunal rules raw material value included in exemption limit calculation under Notification 89/79

The Tribunal allowed the department's appeal, ruling that the value for computing the exemption limit under Notification 89/79 should include the value of raw materials supplied, in line with Section 4 of the Central Excises Act. The Tribunal set aside the impugned order and rejected the respondent's contentions, citing the Supreme Court's judgment in Empire Industries Ltd. v. Union of India as applicable to the case.

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Issues:
1. Computation of exemption limit under Notification 89/79 for excisable goods manufactured on a job basis.
2. Applicability of Notification 119/75 to the manufacturing process.
3. Interpretation of value for assessment under Section 4 of the Central Excises Act.

Analysis:

Issue 1:
The case involved determining whether the full value of goods manufactured on a job basis should be considered for computing the exemption limit under Notification 89/79 or only the job charges collected by the respondent company. The respondent argued that they were exempt from duty up to Rs. 15 lakhs and that the value of raw materials supplied by customers should not be included in the computation. The Tribunal noted that the short point in issue was the method of calculating the exemption limit under the notification.

Issue 2:
The Tribunal clarified that the question of whether the benefit of Notification 119/75 applied to the manufacture of mains cords by the respondent company was not necessary to decide the main issue. The Tribunal highlighted that the benefit of Notification 119/75 required the job worker to receive an article from the customer, subject it to a manufacturing process, and return the article to the customer after charging for the activity. The Tribunal cited relevant case law to support its interpretation of Notification 119/75.

Issue 3:
The Tribunal referenced a judgment of the Bombay High Court in the case of Narendra Engg. Works v. Union of India, which emphasized that the value for assessing excisable goods should not include the cost of raw materials, relying on the Voltas case. However, the appellant-Collector mentioned that the Bombay High Court judgment had been stayed by the Supreme Court pending appeal. The Tribunal then referred to the Supreme Court's judgment in Empire Industries Ltd. v. Union of India, which clarified that the value for assessment under Section 4 of the Central Excises Act should include the intrinsic value of processed goods, incorporating the value of raw materials supplied.

In conclusion, the Tribunal allowed the appeal of the department, stating that the value for computing the exemption limit under Notification 89/79 should be in accordance with Section 4 of the Act, including the value of raw materials supplied. The impugned order was set aside, and the contentions of the respondents were rejected, emphasizing the applicability of the Supreme Court's judgment in Empire Industries Ltd. v. Union of India to the case at hand.

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