ORDER
K. Prakash Anand, Member (T)
1. In this matter, appellants are claiming the benefit of Notification No. 119/75 that is to say, payment of duty only on job charges collected from the suppliers of the raw material to whom the impugned goods are returned after manufacture. The goods manufactured are Lead Sub-Oxide and Litharge and the raw material supplied is Lead ingots. The lower authorities have held that the benefit of Notification 119/75 is not available to the appellants because they manufacture a totally new article out of the goods supplied by the customers.
2. Shri J.S. Agarwal, Advocate appears on behalf of the appellants and submits that there is already substantial case law in support of the appellant’s stand that emergence of a new product is no bar to availing of the benefit of Notification No. 119/75. In this connection, he has cited the following decisions:
1. 1983 E.L.T. 876 – Associated Pigments Ltd. v. Collector of Central Excise & Ors.
2. 1986 (24) ELT 113 – Bombay Food Pvt. Limited v. Collector of Central Excise, Bombay.
3. 1978 E.L.T. 533 – Anup Engineering Ltd. v. Union of India <5c Others.
4. 1980 E.L.T. 582 – Madura Coats Limited v. Collector of Central Excise, West .Bengal.
3. The learned advocate has emphasized that the conversion charges collected by the appellants are only in the nature of about Rs. 1,500/-per ton whereas the price of the product is Rs.15,000/- per ton. This shows that appellants are in fact doing only job work.
4. Smt. J.K. Chandar, representing the department, submits that she relies on the decision in the case of National Organic Chemical Industries Ltd. v. Collector of Central Excise, Bombay 1985 (21) ELT 252. Apart from this, she has furnished a copy of the order of this Bench No. C-17/83 dated 22nd February, 1983 in the case of Waldies Ltd. New Delhi v. Collector of Central Excise, Calcutta, in which it has already been held that manufacture of litharge from lead amounts to manufacture of a chemically different substance and cannot be considered as a job work meant to bring the manufacturing of an article to completion, as purported by Notification No. 119/75.
5. We have carefully considered the facts of the case, the orders of the lower authorities and the submissions made before us. There are a number of decisions of the High Courts as well as of this Tribunal on the question, as to what can constitute job work for purposes of Notification No. 119/75. It is true that as held in Anup Engineering Ltd. case, emergence of a new product by itself is no bar to claim the benefit of Notification No. 119/75. However, the concensus of the decisions on the issue is that while each case has to be dealt with on facts and decided on its own merits, the claim to benefit of Notification No. 119/75 can legitimately be made only when the article entrusted by the customer, after the application of the manufacture process by the job worker, does not lose its essential identity entirely. This point is further elaborated in the Tribunal’s decision in the case of Waldies Ltd. (supra) in which it has been held that what is intended is that job work should be small, to bring the manufacturing initially undertaken to a completion. It was held in this case that the conversion of lead into litharge cannot be considered to be a job work as this involves a separate process of complete manufacture resulting in production of a chemically different substance.
6. In view of the fore-going discussion and the decision of this Bench in the case of Waldies Limited, with which we fully concur, this appeal fails and is dismissed.
S.D. Jha, Vice-President (J)
7. I agree. I would like to add that when the Tribunal took decision in Waldies Ltd., New Delhi v. Collector of Central Excise, Calcutta (Order No. C-17/83 dated 22.2.83), Calcutta High Court decision in Associated Pigments case pronounced just 18 days before the Tribunal decision in Waldies case was not available to the Tribunal.
8. When the appellants, from lead ingot obtained from customers, returned litharge to them, the material returned can by no stretch of imagination be said to be article received from customers i.e., lead. Lead has not only undergone further processes but has undergone chemical change also. There has been total transformation of raw material and a new product having different chemical composition is returned to the customers.
9. Though for the reason set out above in Waldies case the Tribunal had not noticed the Calcutta High Court decision in Associated Pigments case, the same was noticed by a 5 Member Bench decision of the Tribunal in National Organic Chemical Industries Ltd., Bombay v. Collector of Central Excise, Bombay 1985 (21) ELT 252 (Tribunal). This was a case where chlorine supplied by the customers on reaction with ethylene of the appellants (who claimed to be job worker) had resulted in emergence of vinyl chloride and other by-products, in all of which chlorine in some form was present but the identity of chlorine as such had been lost. The Tribunal held that in such a case benefit of job work within the meaning of Explanation appended to Notification 119/75 -CE dated 30-4-1975 would not be available. In coming to this conclusion in preference to other High Court decisions the Tribunal had relied on certain observations made by Madras High Court in M/s. Madura Coats Limited case (1982 ELT 370) as seen from para 10 of the Tribunal’s order (supra). Following this 5 Member Bench decision in which the facts were like the present case I would agree that the appellants are not eligible for benefit of exemption under Notification 119/75-CE, dated 30-4-1975 in respect of litharge supplied to customers obtained from out of lead supplied by customers.