BAPALAL AND COMPANY Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) MESSRS Bapalal and Co. (Manufacturing) is the petitioner herein. The petitioner firm has been registered as a partnership firm under the Indian Partnership Act in 1933, the registration number being No. 63 of 1933. In the same year another partnership firm was also registered under the name and style of M/s. Bapalal and Co. (Diamonds) with registration number 64 of 1933. The respective registration certificates were issued by the Registrar of firms as M/s. Bapalal and Co. (Manufacturing Department) and M/s. Bapalal and Co. (Diamonds Department). According to the petitioner excepting for the fact that certain partners are common, the partnership firms are two independent and distinct entities. Though both the firms are situate in the same premises, they function separately. M/s. Bapalal and Co. (Diamonds) supply raw materials such as diamonds and gold to the petitioner and the latter manufactures the jewellery by setting 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 :-

(3.) THE third respondent the Assistant Collector of Central Excise, Madras did not accept the stand of the petitioner. On 22-6-1976 he passed an order stating that the petitioner was liable to pay excise duty at 1% under tariff Item 68 on the invoice value of the jewellery manufactured at the instance of M/s. Bapalal and Co. (Diamonds) and also on the invoice value of the jewellery and silverware manufactured outside and bought and sold by it. THE Assistant Collector took the view that the crude diamonds supplied by M/s. Bapalal and Co. (Diamonds) did not undergo any further manufacturing process at the hands of the petitioner. As regards the gold ornaments 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 both the firms were being treated as one and the same and consequently the petitioner was not entitled to the concession under the notification. It further held that the petitioner by affixing its seal on the articles must be deemed to be manufacturing the other items of jewellery and silverware. Hence this writ petition.