G.T.NANAVATI, J.U.MEHTA - (1.) Special Civil Applications Nos. 1447 of 1980 and 1083 of 1985 are filed by M/s. Apex Electricals Pvt. Ltd. other six petitions are filed by different petitioners but as the question involved in all these petitions is the same all these petitions have been heard together and are being disposed of by this common judgment.
(2.) Apex Electricals is a manufacturer of power and distribution transformers. Such transformers are manufactured by assembling High Tension and Low Tension Coils on assembled core made out of laminations. Laminations are prepared out of Cold Rolled Grain Oriented steel sheet. These sheets are not manufactured in India and therefore they have to be imported from foreign countries. They come in form of rolls. They are first slitted into width of required specification. After slitting is done the slitted rolls also known as strips are further required to be cut into small pieces of required dimensions and designs depending upon requirements of the customers. The places which thus come into existence as a result of this process are known as electrical laminations. They were at the relevant time chargeable to excise duty under Tariff Item No. 28A of the First Schedule to the Central Excises & Salt Act 1944
(3.) Apex Electricals was formerly purchasing C. R. G. O. sheets or ready-made laminations from the market. As it did not possess any facility either for slitting or for cutting the said sheets it used to get both the jobs performed by others on job work basis when it purchased C. R. G. O. sheets from the market. In 1979 it got an import licence and imported C. R. G. O. sheets. In respect of the C. R. G. O. sheets imported by it in the year 1979-80 it had got the slitting work done at Bombay. It had entered into argument with the following six parties for getting the slitted sheets cut into smaller sizes : 1 M/s. Prolite Engineering Company 2 M/s. Ashish Stampings 3 M/s. Sangma Engineering Works 4 M/s. Mayur Engineering Works 5 M/s. Kaveen Engineering Company and 6 M/s. Amar Engineering Company. These parties (hereinafter referred to as the processors) were either sole proprietary or partnership firms. They had got themselves registered as Small Scale Industries and also made necessary declarations before the Excise Authorities for claiming exemption under Notifications Nos. 71 of 1978 dated 1-3-1978 and 111 of 1978 dated 9-5-1978. As the turn-over of each of those parties did not exceed Rs. 5 lacs in the Financial Year 1979-80 they wore allowed to clear the goods manufactured by them without payment of excise duty. Since Apex Electricals was not doing the work of manufacturing electrical laminations it did not pay any duty on the electrical laminations manufactured by those six processors for Apex Electricals. It is the petitioners case that all these activities were carried on by the petitioners to the knowledge of the Excise Authorities. Till April 1980 no objection was raised by the Excise Department with respect to the exemptions claimed by these six processors or non-payment of duty by Apex Electricals. However on 3/04/1980 Apex Electricals was directed by the Superintendent Central Excise Range VI Vadodara to follow the prescribed procedure under the Central Excises and Salt Act 1944 and the Central Excise Rules 1944 in respect of the goods which the said six processors were manufacturing for Apex Electrical. The Superintendent directed Apex Electricals to do so as he was of the opinion that Apex Electricals with respect to these six processors was a loan licensee. By his later dated 17-4-1980 he informed Apex Electors to apply for loan licence and follow the prescribed procedure. By that letter those six processors were also informed that as they were working on behalf of Apex Electricals the declarations filed by them were not acceptable.;