PRESTIGE ENGINEERING (INDIA) LTD. ETC. ETC.versusTHE COLLECTOR OF CENTRAL EXCISE, MEERUT, ETC. ETC.

           PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE                   31

    No. 119/75, so that it would be liable to pay duty only on the value of the A
    job work undertaken by it, as otherwise it would be liable to pay duty on
    the full value including the value of steel pipes supplied by Modipon.
    Unable to succeed before the Central Excise Customs and Gold (Control)
    Appellate Tribunal, the appellant pr-eferred the appeal.
                                                                                B
          Similarly, in the other appeals also the appellants claimed the
    benefit of the Notification No. 119/75.

          Disposing of the appeals, this Court

           HELD : 1.1. Once an expression is defined in the Act, that expressionc
    wherever it occurs in the Act, Rules or Notifications issued thereunder,
    should be understood in the same sense. The expression "manufactured"
    in the Notification should be understood as defined in the Central Excises
    and Salt Act, 1944. At the same time, it cannot be said that the expression
     "manufacture" contemplated by Notification No.119/75 is confined to those D
    .processes alone which are "incidental or ancillary to the completion of
    manufactured product" - processes contemplated by clause (i) of Section
    2 (f). There is no warrant for restricting. the meaning of the expression
    "manufactured" occurring in the Notification only to the aforesaid proces-
    ses. The stress in the Notification is rather upon the word 'job work'. The E
    dictionary meaning of the expression 'job work' is "work done and paid for
    the job". The Notification, it is evident, was conceived in the interest of
    small manufacturers undertaking job-works. The idea behind the Notifica-
    tion was to help the job-workers - persons who contributed mainly their
    labour and skill, though done with the help of tools, gadgets or machinery,
                                                                                 F
    as the case may be. The Notification was not intended to benefit those who
     contributed their own material to the articles supplied by the customer
    and manufactured different goods. However, addition or application of
    minor items by the job-worker would not detract from the nature and
    character of his work. [44-B, G-H, 45-A-C]


-
                                                                                G
          1.2. The above interpretation does not render the Explanation in the
    Notification redundant in any manner, while at the same time it advances ·
    the object of the Notification, vi~., helping factories undertaking manufac-
    turing processes in the nature of job-work. It is true that processes
    incidental or ancillary to the completion of the manufactur~d product are H
    32                    SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A within the purview of the Notification, but it may not be correct to say that
    the Notification refers only to those processes and to nothing else. Insist-
    ing upon the same article being returned to the customer after undergoing
    the manufacturing process at the hands of the job-worker may rob the
    Notification of any substance whatsoever. Confining the operation of the
    Notification only to those processes which are incidental or ancillary to
B   the completion of the manufactured product amounts to undue curtail-
    ment of the ambit of the Notification. If that was the intention of the
    Central Government in issuing the Notification, it would have said so
    clearly. The Notification was issued simultaneously with the introduction
    of Tariff Item 68 in Schedule-I to the Act and was intended to help those
c   factories undertaking job works, who were charging their customers only
    for the work done by them. In their hands, the value of the article would
    be the value of the job-work done by them - and not the total value of the
    article which would have been the case but for the Notification.
                                                             (45-E-H, 46-A-C]
D         Union of India v. Delhi Cloth and General Mills Co. Ltd., A.I.R. (1963)
    S.C. 791, relied on.

           Precision Te/econ Products v. Superintendent of Central Excise and
    Ors., (1986) 24 E.L.T. 235 and National Organic Chemical Industries Ltd. v.
    Collector of Central Excise Bombay, (1985) 21 E.L.T. 252, affirmed.
E
          Madura Coats Ltd. v. Collector ~f Central Excise, (1980) E.L.T. 582;
    Collector of Central Excise v. Madura Coats 1-:td., (1982) 10 · EL.T. 129;
    Associated Pigments Ltd. v. Collector of Central Excise, Calcutta, (1983) 13
    E.L.T. 876 andAnup Engineering Co. v. Union of India, (1978) 2 E.L.T. 533,
    considered and explained.
F
          Bapalal & Co. v. Government of India, (1981) E.L.T. 587; Madura
    Coats Ltd. v. Superintendent of Central Excise, (1982) 10 E.L.T. 370 and
    Union of India v. Delhi Cloth and General Mills Ltd., A.I.R. (1963) S.C. 791,
    referred to.
G
    CIVIL APPEAL NO. 3197/1986

          All that Modipon does is to supply steel pipes. The appellant pur-
                                                                                    -
    chases guide rings and strengthening rings from the market. It fits these
    rings into those steel pipes by itself or gets them fitted in another unit.
H   Thereafter, adopters are fitted on the sides of the cops and then the plastic
         PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE [B.P. REDDY, J.]       33

     sleeves are fitted on the cylinders of the cops. This is not a case where the A
     rings and the adopters and sleeves are supplied by Modipon. It is not
     suggested that the value of rings, adopters and sleeves is very small
     vis-a-vis the value of steel pipes. The additions made by the appellant are
     not minor additions; they are of a substantial nature and of considerable
     value. Except the pipes, all other items which go into the manufacture of B
     cops are either purchased or procured by the appellant himself and he
     manufactured the cops out of them. The work done by him cannot be
     characterised as a job-work. If all the requisite rings, adopters and sleeves
I_
     had also been supplied by Modipon, it could probably have been said that
     the appellant's work is in the nature of job-work. But that is not the case
     here. The Tribunal was, therefore, right in holding that the appellant C
     cannot avail of the benefit of the Notification. (46-E-H]

     CIVIL APPEAL NOS. 1384-85/1987:

            Since it does not appear that the respondent adds any of his own
     material while manufacturing the transmitters and components as job- D
     work, the High Court was right in extending the benefit of the Notification
     to the respondent. It appears from the record that all the material required
     for manufacturing the transmittes and components, namely, aluminium
     alloy, nickel, silver, graphite rods, carbon granules are supplied by the
     Indian Telephone Industries free of cost to the respondent. (47-B-CJ         E
     CIVIL APPEAL NO. 3464/1988:

           It appears that the customer entrusts lead ingots to the appellant
     who manufactures lead suboxide and Rtharge from them. Whether the
     appellant adds any of his own material or whether the said manufactured        F
     products are made wholly or substantially from the material supplied by
     the customer is not clear from the judgment of the Tribunal. In the
     circumstances, the matter is remitted to the Tribunal for a decision afresh
     according to law after verifying the necessary facts and in the light of the
     ratio of this judgment. (47-E]                                                 G
     CIVIL APPEAL NOS. 19-22/1980:

           The process employed by the respondent 1s not clearly set out in
     these appeals. The matters are remitted to the High Court for ascertaining
     the relevant facts and to decide the appeal according to law in the light of   H
    34                   SUPREME COURT REPORTS [1994) SUPP. 3 S.C.R.

A   the ratio of this judgment. [47-G]

    CIVIL APPEAL NO. 3331/1984:

          The Tribunal denied the benefit of the Notification to the appellant
    in view of the facts and circumstances of the case. There is no flaw in the     ~
B   reasoning of the Tribunal. [48-E]

    CIVIL APPEAL NO. 3963/ 1990 :

          The High Court does not set out the relevant facts nor the manufac-
    turing process undertaken by the respondent writ petitioner. In the cir-
C   cumstances, the appeal is allowed and the matter remitted to the High
    Court for looking into the relevant facts and to dispose of the writ petition
    according to law in the light of the ratio of this judgment. [48-F-G]

    CIVIL APPEAL NO. 2867/1991:

D          In this case, the respondent receives high density polythene fabric -
    from its customers and prepares bags out of it. He also prints a logo or
    some other matter on the said bags as per the specification o(,the ens;
    tomer. The High Court held that the work done by the respondent-writ
    petitioner was in the nature of job work and there is no e~tor in the
E   reasoning of the High Court. It is clear that the respondent manufactures
    bags wholly out of the material supplied by the customer and the mere
    probable addition of thread and/or other bonding material would not make
    a difference to the application of the Notification. [48-H, 49-A-B]

          CIVIL APPELLATE JURISDICTION : Civil Appeal No. 3197 of
F   1986 etc. etc.

         From the Judgment and Order dated 21.5.86 of the Central Excise
    Customs and Gold (Control) Appellate Tribunal, New Delhi in ED (S.B.)           -
    A. No. 2327 of 1984-D.

G         Ranjit Kumar for the Appellant in C.A. No. 3464/88.

         Sunil Gupta, Ravinder Narain and Ms. Amreta Mitra JBD & Co. for
    the Appellants.

          P.H. Parekh, Ms. Smriti Misra and Ms. Bina Madhvan for the
H Respondents in C.A. Nos. 19-20/80.
          PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE (B.P. REDDY, J.]      35

            S.S. Javeli, Ms. Sadhana Ramachandran and Raju Ramachandran for        A
       the Respondents in C.A. Nos. 1384-85/87. ·



....        Joseph Vellapalli, Vijay Kr. Verma, R.P. Srivastava, Dileep Tandon
       and Parmeswaran for the Union of India .

             V.J. Francis, H.S. Parihar and Ms. Sushma Suri for the Respondent     B
       in C.A. No. 3331/84.

            The Judgment of the Court was delivered by

            B.P. JEEVAN REDDY, J. CIVIL APPEAL No. 3197 of 1986.
                                                                                   c
             This appeal preferred under Section 35-L of the Central Excise and
       Salt Act, 1944 raises a question as to the true meaning and purport of
       Notification No. 119/75-C.E. dated April 30, 1975 issued by the Central
       Government under Rule 8(1) of the Central Excise Rules, 1944. The
       Notification reads as follows :
                                                                                   D
                                  "NOTIFICATION

               Exemption to goods produced on the job work basis :- In exercise
               of the powers conferred by sub-rule (1) of rule 8 of the Central
               Excise Rules, 1944, the Central Government hereby exempts goods     E
               falling under Item No. 68, of the First Schedule to the Central
               Excise and Salt Act, 1944 (1 of 1944), manufactured in a factory
               as a job work from so much of the duty of excise leviable thereon
               as is exce~s of the duty calculated on the basis of the ·amoWlt
               charged for the job work.
                                                                                   F
                   Explanation:- For the purposes of this notification, the expres-
               sion 'job work' shall mean such items of work where an article
               intended to undergo manufacturing process is supplied to the job
               worker and that article is returned by the job worker to the



--
               supplier, after the article has undergone the intended manufactur-
                                                                                    G
               ing process, on charging only for the job work done by him."

              Since there is no dispute as to the facts found by the Tribunal, we
       shall state the relevant facts from the order under appeal. As a matter of
       fact, a number of questions were raised before the Tribunal, of which we
       are concerned only with one, viz., the one pertaining to the Notification H
    36                     SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A    No. 119/75. We shall, therefore, state the facts insofar as they are relevant
     to the said question.

          The appellant had entered into an -agreement with M/s. Modipon
    Limited, Modi Nagar whereunder Modipon-was to supply steel pipes from
    which the appellant was to manufacture cops (falling under Tariff Item No.
B   68 of the Central Excise Tariff Schedule in force at the relevant time). The
    process of manufacture of new cops is stated by the Tribunal - it is in fact
    drawn from the memorandum of appeal filed by_ the appellant before the
    Tribunal - in the following words :

c            "Fabrication of new cops is carried out by First fitting the guide
             rings and strengthening rings in the steel pipes which are obtained
             from the customer. The centre guide rings and the strengthening
             rings are purchased. This was being done without the aid of power,
             i.e., by hand. After the rings were fitted, the adopters were also
             fitted on the sides of a cop in the same manner as it is done for
D
             repairs. The plastic sleeves is then fitted on cylinders of the cop.
             All this process is' carried out without the aid of power in the
             factory."

          From the above process, it is clear that Modipon supplied steel pipes
E only. The appellant purchased centre guide rings and the strengthening
  rings which were fitted inside the steel pipes to lend them strength. After
  the rings were so fitted, adopters were fitted on the sides of the cops and
  thereafter plastic sleeves fitted on the cylinders of the cops. Though in the
  above extract, it was asserted by the appellant that all the said process was
F carried out without the aid of power, it was admitted before the Tribunal
  (Paragraph 11 of the order under appeal) that the process of fitting the
  illner rings, strengthening rings and guide rings was got done by the
  appellant through another unit with the aid of power. Be that as it may,
  the question is whether the benefit of Notification No. 119/75 can be
  claimed by the appellant? If the appellant is not able to claim the benefit
G of the Notification; the value of cops manufactured by it would be its full
  value including the value of steel pipes supplied by Modipon. But in case
  the Notification enures to his benefit, he would be liable to pay duty only
  on the value of the job,work undertaken by him. In short, the question is
  whether the manufacturing process undertaken by him was in the nature
H of 'job wor~' within the meaning of the Notification?
        PRESTIGE ENGG. v. COLLECTOR OF CENTP..AL EXCISE [B.P. REDDY, J.]         37

          The crucial words employed in the Notification are "goods falling           A
    under Item No.68 ....... manufactured in a factory as a job work ..... ". The
    expression 'manufacture' is defined by clause (f) of Section 2 whereas the
    expression 'factory' is defined in clause (e). The definitions read as follows:

             "(f) "manufacture" includes any process :-
                                                                                      B
             (i) incidental or ancillary to the completion of manufactured
             product;

             (ii) which is specified in relation to any goods in the Section or
             Chapter notes of the Schedule to the Central Excise Tariff Act,
             1985 as amounting to manufacture,                                        c
             and the word "manufacturer" shall be construed accordingly and
             shall include not only a person who employs hired labour in the
             production or manufacture of excisable goods, but also any person
             who engages in their production or manufacture on his own ac- D
             count.

             ( e) "factory" means any premises, including the precincts thereof,
             wherein or in any part of which, excisable goods other than salt
             are manufactured or wherein or in any part of which any manufac-
             turing process connected with the production of these goods is           E
             being carried on or is ordinarily carried on."

           So far as the expression "job work" is concerned, it is not defined in
    the Act but in the Notification itself. The Explanation appended to the
    Notification defines it for the purposes of the said Notification. It says that
    job work shall mean "such items of work where an article intended to              F
    undergo manufacturing process is supplied to the job worker and that
    article is returned by the job worker to the supplier, after the article has
    undergone the intended manufacturing process, on charging only for the
    job work done by him."




-          Now, the contention of the learned counsel for the appellant is this:
    the definition of the expression 'manufacture' in the Act is only an inclusive.
    definition. The actual connotation and meaning of the word "manufacture"
    has been explained by this court to mean ''bringing into existence a new
    substance". If the article given to the job worker is merely subjected to
    some process and returned to the supplier, it cannot be said that the article
                                                                                      G




                                                                                      H
    38                   SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R..

A has undergone the process of manufacture. Unless new goods emerge, it
    cannot be said that the process of manufacture has been gone through. If
    so, ~he insistence of the Revenue, based upon the Explanation appended
    to the Notification that the same article which was given to the job worker
    must be returned to the supplier and in case the article supplied by the job
    worker to the supplier is different from the article supplied by the supplier
B   to him, it is not a job work, has the effect of nullifying the words used in
    the main limb of the Notification namely, "manufactured in a factory". The
    Notification does contemplate manufacture of articles, undertaken, no
    doubt, as a job work. The appellant was supplied steel pipes by Modipon.
    He purhcased the required rings from the market and fitted (or got them
C   fitted) inside those pipes with a view to strengthen them. Thereafter, the
    appellant fitted the adopters and plastic sleeves whereupon they became
    marketable cops, which he supplied back to Modipon. This was a case of
    manufacture in a factory as a job work.

D        On the other hand, the contention of the learned counsel for the
  Union of India runs thus : it is true that the main limb of the Notification
  uses the words "manufacture in a factory" but those words are qualified by
  the immediately following words" as a job work". The expression "job work"
  is defined in the Explanation contained in the Notification itself. According
  to the explanation, "job work" means such items of works where an article
E intended to undergo manufacturing process is supplied to the job worker
  and that very article is returned by the job worker to the supplier after the
  article has undergone the intended manufacturing process. The word
  "manufactured" in the main limb of the Notification has to be read along
  with and harmonised with the Explanation. The definition of 'manufacture'
F shows that "any process incidental or ancillary to the completaion of a 1
  manufactured product" is also manufacture. The manufacturing con-
  templated by the Notification is this kind of manufacture alone and not
  manufacturing in its ordinary sense. This is the only way of reconciling the
  word "manufactured" with the Explanation contained in the Notification.
G Only where the manufactured product is subjected to an incidental or an
  ancillary process with a view to make it a marketable product is the
  Notification attracted but not where a totally new article is manufactured.
  If the extended meaning, contended for by the appellant, -is placed upon
  the said Notification, it would tend to defeat and nullify the main charging
  section contained in Section 3 which levies duty upon all excisable goods
H produced or manufactured in India. The Notification did not and could
   PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE (B.P. REDDY, J.]        39

not have intended to exempt the manufactured goods from the excise duty A
but only those processes undertaken as job works, which but for the said
Notification would have obliged the appellant to pay duty upon the entire
value of the manufactured product including the value of the steel pipes
supplied by Modipon.

      It is brought to our notice that there has been a cleavage of opinion   B
among the High Courts and various Benches of CEGAT on the meaning
and purport of the said Notification. We may briefly examine those
decisions.

       In Madura Coats Ltd. v. Collector of Central Excise, (1980) E.L.T. 582, C
G.N.Ray, J. (as he then was) of the Calcutta High Court considered the
case where the assessee-company used to arrange in a particular manner
nylon or rayon yarn supplied to it by its customers. The said arrangement
was known as "tyre chord warpsheet". The excise authorities took the stand
that the said process amounted to manufacture inasmuch as it brings it into D
existence new goods. The learned Judge, however; took the view that no
manufacture was involved in the said process and, therefore, the duty under
Tariff Item 68 was not attracted. Alternatively, it was held by the learned
Judge that even if the tyre chord warps. were new commodities, the
petitioner, having manufactured the same as job work, was entitled to the E
benefit of Notification No. 119/75. This was so held notwithstanding the
fact that the assessee supplied cotton wefts to hold the nylon or rayon.yarn
supplied by the customers for performing the job work in question. This
view of the learned Judge was affirmed by the Division Bench cotnprising
M.M. Dutt and R.K. Sharma, JJ. in Collector of Central Excise v. Madura
Coats Ltd., (1982) 10 E.L.T. 129. The Division Bench h~ld that a work does F
not cease to be a job work simply because the job worker supplies some
additional articles which do not constitute a substantial part of the
manufacturing process. These decisions were followed by another learned
Single Judge, Chittatosh Mookerji, J. in Associated Pigments Ltd. v. Collec-
tor of Central Excise, Calcutta, (1983) 13 E.L.T. 876. In this case, the G
petitioner-assessee used to receive pig-lead or lead ingots from its cus-
tomers for conversion into lead suboxide and lead monoxide. After sub-
jecting the said lead to a process .<the process. undertaken by the petitioner
is not clear from the report) the petitioner returned the finished product
to its customers and charged the agreed price for the said process. The H
     40                    .SUPREME COURT REPORTS [1994) SUPP. 3 S.C.R.

A petitioner did not supply any material for manufacturing lea_d suboxide and
     lead monoxide. He claimed the benefit of the Notification. The Revenue's
     contention was that by virtue of the manufacturing process undertaken by
     the petitioner pure lead got converted into and emerged as totally new
     articles/goods called lead suboxide and lead monoxide. In such a situation,
B    the Revenue submitted, the Notification is not attracted. The learned Judge
     quoted with approval the earlier decisions of the Calcutta High Court
     aforesaid a.s well as the decision of the Gujarat High Court in Anup
     Engineering Co. v. Union of India, (1978) 2 E.L.T. 533 and upheld the
     petitioner's claim. The learned Judge also referrred to the meaning of the
C    word "manufacture" as stated by this court in Union of India v. Delhi Cloth
     and General Mills Co. Ltd., A.I.R. (1963) S.C. 791 and held that merely
     because a new commodity emerges as a result of manufacturing process
     undertaken as a job work, the benefit of the Notification cannot be denied.

o·         In Anup Engineering Ltd. v. Union of India, (which is the subject
     matter of Civil Appeal Nos. 19-22of1980 before us), a Division Bench of
     the Gujarat High Court dealt with a case where the customers supplied to
     the petitioner-company materials such as tin plates, sheets, tubes, pipes etc.
    which were duty paid excisable goods. From these materials, the petitioner
    manufactured the desired equipment and components. (The decision does
E riot mention the exact products manufactured by the petitioner.) The excise
     authorities determined the value of the articles manufactured by the
    petitioner taking the total value of the company materials supplied to the
    petitioner and the value of the work done by him. The Division Bench
    noted in the first instance that job work in the context of the Notification
F means "such items of work where the article intended to undergo manufac-
     turing process is supplied to the job worker and that article is returned by
     the job worker to the supplier after the article has undergone the intended
    manufacturing process, charging only for the job work done by him". The
    Bench added : "it is clear, therefore, that the article supplied by the
     customer has to undergo manufacturing process as intended. It is obvious,
G in the context of the excise law, that, unless a new article known to trade
   . emerges after the manufacturing process is completed, excise duty cannot
    be levied at all. That is the ·very basis of taxation under the ex~ise law. In
     order to exempt job workers from payment of duty except to the extent of
  ·duty on the job work charges, this Explanation to the Notification makes
,P  it clear ·that the article which undergoes manufacturing process at the
        PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE [B.P. REDDY, J.)        41

    hands of the job worker, must be supplied by the customer and the only          A
    thing which the job worker has to do is to subject that article supplied by
     the customer to the intended manufacturing process. The final result after
     the manufacturing process is completed has to be returned to the customer
    and the job worker only charges for the work done by him." The Division
    Bench gave two illustrations to explain their point. One is where a sheet of    B
    brass is supplied by a customer to a factory which does the job work and
    the factory gets brass pots made from the sheets so supplied. Though the
    brass pot is a new article, it cannot be denied that the work done by the
    factory is job work. The second illustration given is where the customer
    takes a piece of suit length to a factory which undertakes the job work of
    making suits according to the specification of the customer. The suit           C
    stitched is certainly a different article from the cloth supplied but all the
    same the work done by the factory is a job work. In support of this view,
    the Division Bench relied upon the Trade Notice issued by the Deputy
    Collector, Central Excise, Bombay on April 30, 1975 wherein it was stated
    that it was not necessary for attracting the Notification that the article      D
    received by the job worker and the processed article returned by him
    should have the same trade description. The Division Bench further ob-
    served that accepting the Revenue's contention would render the Notifica-
    tion totally otiose and redundant. If a new article does not emerge after
    the manufacturing process is completed, the Bench observed, there would
                                                                                    E
    be no occasion to levy excise duty at all.

          A learned Single Judge of the Madras High Court, Padmanubhan, J.
    also held in Bapalal & Co. v. Government of India, (1981) E.L.T. 587 that
    where the petitioner merely applies its labour and converts the rough
    diamonds into diamond jewellery for which act of conversion, it receives        F
    labour charges, it amounts to a job work as contemplated by the Notifica-
    tion.


          A Division Bench of the Karnataka High Court has also taken the

-   same view in Precision Te/econ Products v. Superintendent of Central Excise G
    & Ors., (1986) 24 E.L.T. 235. In this case, the Indian Telephone Industries
    Limited which manufactures telephones entrusted the manufacture of cer-
    tain components to the petitioner. The ITI supplied the raw materials used
    in the manufacture of transmitters and components and the petitioner,
    after manufacturing transmitters and components out of the material so H
    42                    SUPREMECOURTREPORTS [1994]SUPP.3S.C.R.

A   supplied, returned those goods to the ITI, collecting only the job charges.
    The High Court held that the manufacturing process undertaking by the
    petitioner falls within the exprtssion "job work" and the petitioner is
    entitled to the benefit of the Notification. This decision is the subject-mat-
    ter of Civil Appeal 1384-85 of 1987 now before us.                      '   ·
B
            A diffferents view has been expressed by a learned Single Judge of
    the Madras High Court, Sathiadev, J. in Madura Coats Ltd. v. Superinten-
    dent of Central Excise, (1982) 10 E.L.T. 370. In this case, the petitioner was
    supplied duty paid filament and spun yarn material which he twisted into
    different types producing "fenoplast yarn". The question was whether such
c   a process amounted to manufacture and if it did, whether Notification No.
    119/75 was attracted? The learned Judge proceeded on the assumption that
    the process involved amounts to manufacturing process but held that the
    petitioner was entitled to the benefit of the said notification inasmuch as
    he did not add any materials on its own while carrying out the process of
D   twisting. The learned Judge observed that whatever quantity had been
    handed over by the supplier to the petitioner was fully returned by the
    petitioner. The only process carried out by the petitioner was to twist the
    materials and that in spite of change in the physical form, the goods were
    still identifiable and bore the same character in which they were supplied
    by the supplier. Having so held, the learned Judge proceeded to observe:
E   "if during the manufacturing process, the materials supplied by third
    respondent lose their identity and the product that is handed over to the
    supplier is entirely different in which the articles supplied cannot be
    identified, the concession contemplated in the Notication would not be
    available." The learned Judge emphasised that in the process undertaken
F   by the petitioner in that case, not even incidental material was added while
    doing the job work.

           In view. of the conflict of opinion on the question, a Special Bench
    of five members of CEGAT was constituted to consider the issue. The
    decision of the Special Bench is reported in National Organic Chemical
G   Industries Ltd. v. Collector of Central Excise, Bombay, (1985) 21 E.L.T. 252.
    The facts considered by the Special Bench are: the appellants were
    manufacturing ethylene. They bought chlorine for that purpose. Mis Calico
    Chemicals, who may be called a customer, also used to make available
                                                                                     -
    chlorine to the appellants. The appellants reacted chlorine with ethylene
H   for conversion into vinyle chloride. A part of vinyle chloride so manufac-
         PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE [B.P. REDDY, J.)         43

     tured by the appellants was delivered to Calico Chemicals, calculated with       A
     reference to an agreed formula. The balance vinyle chloride was utilised
     by the appellants for further conversion into polyvinyle chloride. The
     question was whether the vinyle chloride that was delivered to Calico
-:   Chemicals by the appellants attracted excise duty on the value of the said
     vinyle chloride or whether the appellants were liable to pay duty only on        B
     the amount charged by them as conversi~n charges. From the facts afores-
     tated, it is clear that only a part of the material required for manufacturing
     vinyle chloride was supplied by Calico Chemicals and part of the material,
     namely, ethylene utilised for the said manufacture belonged to the appel-
     lants itself. Upon those facts and after considermg the several decisions of     C
     the High Courts and also the earlier decisions of the various Benches of
     CEGAT, the Special Bench took the view that the benefit of the said
     notification is confined only to those processes which are incidental or
     ancillary to the completion of the manufactured product - reference is to
     the definition of the expression "manufacture" in Section 2(t) of the Act -      D
     and not to the usual activities that are normally understood as comprised
     in the activity of manufacture. The Special Bench held that to enable a
     person to claim the benefit of the said notification, he will have to receive
     an article from the customer, subject the same to the manufacturing
     process in the nature of a process incidental or ancillary to the completion
     of the manufactured product and then return the said article to the              E
     customer, recovering from the customer charges for such activity only. The
     Special Bench laid emphasis on the Explanation which says that the article
     which is supplied by the customer to the job worker, that very article must
     come back to the supplier, after undertaking the manufacturing proce~s.
     The manufacturing process contemplated by the said Notification, the             F
     Special Bench held, is only that process which is incidental or ancillary to
     the completion of the manufacturing product. The Special Bench disagreed
     with the Calcutta and Gujarat High Courts insofar as they held that since
     manufacture necessarily involves emergence of new goods, such emergence
     of new goods cannot be a ground for denying the benefit "of the Notifica-        G
     tion. The Special Bench laid emphasis on the definition of the expression
     "manufacture" in Section 2(t) of the Act and pointed out that the said
     expression is not confined to its ordinary connotation pointed out by this
     Court in Union of India v. Delhi Cloth and General Mills Ltd., A.LR. (1963)
     s.c. 791.                                                                        H
    44                    SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A          In our opinion, while the Calcutta and Gujarat High Courts have by
    and large understood the Notification correctly, their reasoning is vitiated
    by their omission to understand the expression "manufacture" in the sense
    it is defined in the Act.. Both the High Courts have understood the
    expression "manufacture" in its ordinary/normal sense (as pointed out by
    this court in Delhi Cloth and General Mills Ltd.) Indeed, they have not even
B
    referred to the definition in Section 2(t) of the Act. Once an expression is
    defined in the Act, that expression wherever it occurs in the Act, Rules or
    Notifications issues thereunder, should be understood in the same sense.
    Indubitably, the definition of "manufacture" in Section 2(t) endows a wider
    content to the expression; several processes which would not ordinarily be
c   understood as amounting to manufacturing are specifically included within
    its ambit. Clauses (i) and (ii) of the definition make this aspect clear
    beyond any doubt. In this connection, it must be remembered that even the
    unamended definition of "manufacture" included within the ambit of-the
    definition several processes and activities which would not otherwise have
D   amounted to manufacture. The unamended definition contained as many
    as eight sub-clauses. Sub-clause (iv), for example, stated that in relation to
    goods comprised in Item No. 18-A of the First Schedule, the expression
    "manufacture" includes sizing, beaming, warping, wrapping, winding and
    reeling or any one or more of these processes or the conversion of any
E   form of the said goods into another forms of such goods. (Item 18-A of
    the First Schedule pertained to "cotton yarn - all sorts").


         Sri Vellapally, learned counsel for the Revenue - and the Special
  Bench of the CEGAT - is, therefore, right in pointing out the said defect
F in the reasoning of the Calcutta and Gujarat High Courts and in saying
  that the expression "manufactured" in the Notification should be under-
  stood as defined in the Act. At the same time, we find it difficult to agree
  with the learned counsel that the expression "manufacture" contemplated
  by the Notification is confined to those processes alone which are "inciden-
G tal or ancillary to the completion of manufactured product" - processes
  contemplated by clause (i) of Section 2(t). We do not see any warrant for
  restricting the meaning of the expression "manufactured" occurring in the
  Notification only to the aforesaid processes. In our opinion, the stress in
  the Notification is rather upon the word "job work". Now, what does the
H expression 'job work' mean? On this question, the Explanation is not of
    PRESTIGE ENGG. v. COLLECTOR OF CENTRAL EXCISE [B.P. REDDY, J.]          45

much assistance. The Concise Oxford Dictionary assigns several meanings           A
to the expression 'job' but the relevant meaning having regard to the
present context is "a piece of work especially one done for hire or profit".
The expression 'job work' is assigned the following meaning: "work done
 and paid for the job". The Notification, it is evident, was conceived in the
interest of small manufacturers undertaking job-works. The idea behind the        B
Notification was to help the job-workers - persons who contributed mainly
their labour and skill, though done with the help of tools, gadgets or
machinery, as the case may be. The Notification was not intended to benefit
those who contributed their own material to the articles supplied by the
customer and manufactured different goods. We must hasten to add that
addition or application of minor items by the job- worker would not detract
                                                                                  c
from the nature and character of his work. For example, a tailor entrusted
with a cloth piece and asked to stitch a shirt, a pant or a suit piece may
add his own thread, buttons and lining cloth. Similarly, a factory may be
supplied the shoe uppers, soles etc. by the customer and the factory applies
its own thread or bonding material and manufactures shoes therefrom and           D
supplies them back to the customer, charging only for its work; The nature
of its work does not cease to be job-work. Indeed, this aspect has been
stressed in all the decisions of High Courts referred to hereinbefore.

       The interpretation placed by us does not render the Explanation in         E
the Notification redundant in any manner, while at the same time it
advances the object of the Notification, viz., helping factories undertaking
manufacturing processes in the nature of job-work. The restricted inter-
pretation contended for by the Revenue unduly curtails the operating field
of the Notification. True it is that processes incidental or ancillary to the     F
completion of the manufactured product are within the purview of the
Notification, but it may not be correct to say that the Notification refers
only to those processes and to nothing else. In the two illustrations given
inAnup Engineering, viz., where the brass sheet is moulded into a brass pot
and where the cloth piece is stitched into a suit, or in the illustration given
by us, viz., where shoe uppers and soles etc. are supplied by the customer        G
and the factory prepares shoes out of them, it cannot be said that the article
that is entrusted to the factory (undertaking job-work) and the article that
is supplied back to the customer are totally different. They are the same
articles though in a different form. Insisting upon the same article being
returned to the customer after undergoing the manufacturing process at            H
    46                     SUPREME COURT REPORTS (1994) SUPP. 3 S.C.R.

A the hands of the job-worker may rob the Notification of any substance
  whatsoever. The Special Bench evidently laid more emphasis upon the
  Exp~anation which led it to confine the operation of the Notification only
  to those processes which are incidental or ancillary to the completion of
  the manufactured product. That in our view amounts to undue curtailment
  of the ambit of the Notification. If that were the intention of the Central
B
  Government in issuing the Notification, it would have said so clearly. It
  must be remembered that the Notification was issued simultaneously with
  the introduction of Tariff Item 68 in Schedule-I to the Act and was
  intended to help those factories undertaking job works, who were charging
  their customers only for the work done by them. In their hands, tli.e value
c of the article would be the value of the job-work done by them - and not
  the total value of the article which would have been the case but for the
  Notification. According to the restricted view contended for by the
  Revenue, a tailoring factory stitching clothes out of the cloth supplied or
  a factory preparing shoes out of material supplied by the customer, in the
D illustrations given hereinabove, would not qualify for the benefit of the
  Notification. (We are riot concerned herein how such articles would be
  valued in the hands of the supplier.)

          Now, let us look at the proeess involved in this appeal. All that
E. Modipon does is to supply steel pipes. The appellant purchases guide rings
   and strengthening rings from the market. It fits these rings into those steel
   pipes by itself or gets them fitted in another unit. Thereafter, adopters are
   fitted on the sides of the cops. and then the plastic sleeves are fitted on the
   cylinders of the cops. This is not a case where the rings and the adopters
   and sleeves are supplied by Modipon. It is not suggested that the value of
F rings, adopters and sleeves is very. small vis- a-vis the value of steel pipes.
   The additions made by the appellant are not minor additions; they are of
   a substantial nature and of considerable value. Except. the pipes, all other
   items which go into the manufacture of cops are either purchased or
   procured by the appellant himself and he m~ufactures the cops out of
G them. The work done by him cannot be characterised as a job-work. If all
   the requisite rings, adopters and sleeves had also been supplied by
   Modipon, it could probably have been said that the appellant's work is in
   the nature of job-work. But that is not the case here. The Tribunal was,
   therefore, right in holding that the appellant cannot avail of the benefit of
H the Notification. The appeal accordingly fails and is dismissed. No costs.
            PRESTIGE ENGG. v. COLLECTOR OF CENI'RAL EXCISE [B.P. REDDY, J.J       47

              (:IVIL APPEAL NOS. 1384-85 OF 1987                                       A
               These appeals are preferred against the judgment of the Karnataka
        High Court in Precision Telecom Products v. Union .of India & Ors., (1986)
        24 E.L.T. 235 with which decision we have already dealt with. Since it does
        not appeal that the respondent adas any of his own material while
        manufacturing the transmitters and components as job work, the High B
        Court was right in extending the benefit of the Notification to the respon-
        dent. It appears from the record that all the I!lateial required for manufac-
        turing the transmitters and components; namely, alluminium alloy, nickel,
        silver, graphite rods, carbon granules are supplied by the Indian Telephone
        Industries free of cost to the respondent. In the circumstances, there are C
        no grounds for interference with the judgment of the High Court. The
        appeals are accordingly dismissed. No costs.

              CIVIL APPEAL NO. 3464 OF 1988

              In this appeal directed against the decision of the CEGAT, New D
        Delhi, the Tribunal has not clearly dealt with the process of manufacture
        undertaken by the appellant. It appears that the customer entrusts lead
        ingots to the appellant who manufactures lead suboxide and litharge from
        them. Whether the appellant adds any of his own material or whether the
        said manufactured products are made wholly or substantially from the
        material supplied by the customer is not clear from the judgment of the E
        Tribunal. In the circumstances,. the proper course is to remit the matter to
        the Tribunal for decision afresh according to law after verifying the neces-
        sary facts and in the light of the ratio of this judgment. The appeal is
        allowed and the matter remitted to the Tribunal accordingly. No "costs.
                                                                                       F
              CIVIL APPEAL NOS. 19-22 OF 1980

              In these appeals directed against the judgment of the Gujarat High
        Court too the process employed by the respondent is not clearly set out.
        In the circumstances, the appeals are allowed and the matters remitted to
        the High Court for ascertaining the relevant facts and to decide the appeal    G
_,.._   according to law in the light of the ratio of this judgment. The appeals are
        allowed and the matter renlitted accordingly. No costs.

              CIVIL APPEAL NO. 3331.0F 1984

              The appellant, M/s. Sirsilk Ltd. inter alia converts acetic acid into    H
    48                     SUPREME COURT REPORTS [1994] SUPP. 3 S.C.R.

A acetic anhydride as· part of its manufacturing activities. To utilise its
  surplus/spare capacity, it also undertakes the said work on behalf of
  customers. It claimed the benefit of the Notification No.119175 insof~ as
  it undertook the work on ~ehalf of the customers. The judgment of the
  Tribunal states inter alia: "it is admitted by the learned counsel for the
B appellant that customer's acetic acid does get mixed at some stage or other
  with other acetic acid and that there is no certainty that the acetic anhyride
  that is retruned is the product of that customer's very own acetic acid ....... ..
  It is a full-fledged manufacture of a new commodity, and must, therefore,
  pass through all the rigours that such commodities must pass under the
  Central Excise Law. If notification 119/75-CE cannot be applied, then so
C be it. The notification cannot be forced to operate in conditions it is not
  qualified to operate. In the case before us now, we have the added factor
  that acetic anhydride by Sirsilk is not known to be the product of the acetic
  acid brought by the particular customer, because Sirsilk uses this process
  for its own production programmes as well. The acetic acid first gets mixed
D with other acetic acid or the finished anhydride gets mixed with anhydrides
  obtained from other acetic acid. There is no segregation and therefore no
  one can tell that the acetic anhydride was the result of this or that acetic
  acid." Though the Tribunal purported to follow the principle of Anup
  Engineering, it yet denied the benefit of the Notification to the appellant in
E the above facts and circumstances. We see no flaw in the reasoning of the
  Tribunal. The appeal accordingly fails and is dismissed. No costs.

           CIVIL APPEAL NO. 3963 OF 1990

            This appeal is preferred against the judgment and order of a learned
F    Single Judge allowing the writ petition following Anup Engineering. The
     judgment of the High Court does not set out the relevant facts nor the
     manufacturing process undertaken by the respondent-writ petitioner. In
     the circumstances, the appeal is allowed and the matter remitted to the
     High Court for looking into the relevant facts and to dispose of the writ
G    petition according to law in the light of the ratio of this judgment. No costs.

           CIVIL APPEAL NO. 2867 OF 1991

          In this case, the respondent receives high density polythene fabric
  . from its customers and prepares bags out of it. He also prints a logo or
H some other matter on the said bags as per the specification of the customer.
                  '
           . PRESTIGEENGG.v. COLLECTOROFCENIRALEXCISE(B.P.REDDY,J.]           49

         The High Court of Bombay at Nagpur held that, in the above circumstan- A
         ces, the work done by the respondent-writ petitioner was in the nature of
         job work. We see no error in the reasoning of the High Court. It is clear
         that the respondent manufacture bags wholly out of the material supplied
         by the customer and the mere probale addition of thread and/or other
         bonding material would not make a difference to the application of the
         Notification, as pointed out hereinabove. The appeal accordingly fails and B
         is dismissed. No costs.

         G.N.                                               Appeals disposed of.




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