2003 (6) TMI 424 - Commissioner - Central Excise

Summary

Issues Involved:

1. Demand for Additional Excise Duty (AED) under Notification No. 214/86.
2. Liability of job-worker to pay excise duty under Rule 57F(4).
3. Applicability of CBEC Circulars and Tribunal decisions.
4. Imposition of penalty by the Lower Authority.
5. Judicial discipline and adherence to higher appellate authority decisions.

Detailed Analysis:

1. Demand for Additional Excise Duty (AED) under Notification No. 214/86:

The Superintendent of Central Excise issued Show Cause Notices demanding AED (GSI) from the appellant for specific periods, arguing that there is no exemption under Notification No. 214/86 for AED (GSI). The appellant contested this, stating that the duty liability should be discharged by the manufacturer, not the job-worker, as per Rule 57F(4) and CBEC Circular No. 306/22/97-CX., dated 20-3-97. The appellant also cited the Tribunal decision in Anjali Transprints v. CCE, which treated AED (GSI) as excise duty, extending proforma credit under Rule 56A.

2. Liability of job-worker to pay excise duty under Rule 57F(4):

The appellant argued that under Rule 57F(4), the job-worker is not required to pay excise duty. This position is supported by CBEC Circulars and Tribunal decisions, notably in M.Tex v. CCE, Jaipur, which held that job-workers receiving inputs under Rule 57F(3)/57F(4) are not liable to pay excise duty on intermediate products. The appellant also referenced the CBEC Circular No. 278/112/96-CX., clarifying that Rule 13 permits removal of goods for export under bond without payment of duty, including AED.

3. Applicability of CBEC Circulars and Tribunal decisions:

The appellant relied on several CBEC Circulars and Tribunal decisions, which clarified that job-workers are exempt from paying excise duty under job-work notifications and that the duty liability is shifted to the principal manufacturer. The Tribunal decision in Noorani Textile Mills and M.Tex v. CCE, Jaipur were particularly emphasized, both of which supported the appellant's position and were upheld by the Supreme Court.

4. Imposition of penalty by the Lower Authority:

The Lower Authority confirmed the demand and imposed a penalty, relying on the Tribunal decision in Gokak Mills Ltd. v. CCE. The appellant argued that this decision was set aside by the Supreme Court, and thus, the Lower Authority's reliance on it was erroneous. The appellant insisted that the Lower Authority should have followed the M.Tex decision, which was upheld by the Supreme Court and is binding under Article 141 of the Constitution of India.

5. Judicial discipline and adherence to higher appellate authority decisions:

The judgment emphasized the principle of judicial discipline, stating that orders of higher appellate authorities should be followed unreservedly by subordinate authorities. The Lower Authority's failure to follow the Supreme Court's ruling in M.Tex resulted in undue harassment and gross injustice to the appellant. The judgment highlighted the importance of consistency and discipline in tax administration.

Conclusion:

The impugned order demanding AED and imposing a penalty was set aside. The appeal was allowed, reaffirming that the job-worker is exempt from paying excise duty under Notification No. 214/86 and Rule 57F(4), and the duty liability rests with the principal manufacturer. The judgment underscored the binding nature of higher appellate decisions and the necessity for judicial discipline in tax administration.