J&K CIGARETTES LTD Vs. SUPERINTENDENT OF CENTRAL EXCISE

JUDGEMENT

(1.) 4 Shorn of details the facts necessary for the disposal of this petitioner are : that the first petitioner is a limited company registered under the Companies Act, 1956. It had set up a factory for manufacture of cigarettes & is licensed under the Central Excise and Salt Act, 1944 (1944 Act, for short) & 1 -4 license is held by the petitioner in respect the factory. The petitioner -company in its factory besides manufacturing other cigarettes has also been receiving raw material from its customers particularly the Golden Tobacco Company Ltd. Bombay and manufacturing cigarettes out of the raw material, supplied by Golden Tobacco Company - On behalf of the petitioner, the only point canvassed at the time of the petition is that since it only processes the raw material received from its customers and manufactures cigarettes for them, it cannot be charged excise duty on the basis of the actual assessable value of the cigarettes & that if at all it is liable to pay excise duty, it has to be assessed on the basis of the quantum of job charges and nothing more. It is on this basis that the petitioners have sought a writ of certiorari for quashing the impugned directions issued by the respondent No: 2 vide communication No: CE -17/3/ Sog/80/2202 dated 21 -8 -1982.

(2.) THE writ petition has been resisted by the respondents who have disputed some of the factual averments made in the writ petition & besides questioning the maintainability of the petition, have also asserted that the petitioner being manufacturer of exciseable goads, i.e. the cigarettes, is liable for assessment on the basis of the actual value of the manufactured product & not .only on the quantum of job work charges because excise duty is a levy collected at the stage of manufacture of excisable goods. Since, the parties have confined their arguments only on the lone point as noticed above, I refrain from dealing with the challenge to the maintainability of the petition on the ground that disputed questions of facts have been raised.

(3.) THE first point for consideration, therefore, is ; whether the petitioners, who on their own showing manufacture cigarettes from raw material supplied by their customers, can be said to manufacture cigarettes so as to attract the levy of excise duty on the assessable value of the cigarettes ? The answer to the question would depend upon the true meaning and import of the expression "manufacture". Their Lordships of the Supreme Court had an occasion to consider this aspect in Empire Industries Ltd. and others Vs. Union of India & others AIR 1986 S. C. 662 & after an elabotrate discussion on different aspects, their Lordships opined : "It may be noted that taxable event in the context of Sales -Tax law is sale. The taxable event under the Excise Law is manufacture. The moment there is transformation into a new commodity commercially known as a distinct & separate commodity having its own character, use & name, whether be it the result of one process ,or several processes, manufacture takes place and liability to duty is attracted......" (Emphasis supplied) Apart from this authoritive pronouncement, for the purpose of the instant case, the definition of "manufacture" as contained in section 2 (f) of the 1944 Act, puts the controversy beyond any pale of doubt. The definition of "manufacture" reads : " manufacture includes any process incidental or ancillary to the completion of a manufactured product ; & Sub -Clases (i) and (ia) of section 2 (f) of the 1944 Act deal specifically with the preparation of cigarettes & manufactured tobacco and read : "(i) in relation to tobacco includes the preparation cigarettes, cigars, cheroots, biris, cigarette or pipe or hooka tobacco, chewing tobacco or sunff; (la) in relation to manufactured tobacco, includes the labelling or re -labelling of containers & repackingbulk packs to retail packs or the adoption of any other treatment to render the products marketable to the consumers . Thus, from the above definition itself it is abundantly clear that the process of manufacture in relation to tobacco includes the preparation of cigarettes etc. & in relation to manufactured tobacco includes the labeling or re -labeling of containers or the adoption of any other treatment to render the product marketable to the consumer.