2004 (12) TMI 590 - AT - Central Excise

Penalty - demand of duty - Job worker - benefit of Notification No. 214/86 - SSI Exemption under Notification No. 175/86 - Cenvat/Modvat - Adjudication - Show cause notice - HELD THAT - It is clear from the facts that the responsibility of furnishing undertaking etc. in terms of the Notification is cast on the supplier of the goods and not on the job worker. In the present case, it is an admitted position by the Revenue itself that the raw materials were supplied to the appellant by various suppliers and on which the appellant has done job work and returned the processed goods to the suppliers of the raw materials. In the circumstances, what prevented the departmental authorities to call for further details, if required, from the suppliers of the raw-materials in terms of Cause (2) of the Notification is not understandable, before asking the job worker to pay duty on the job work done, when in fact the job worker is not required to furnish any undertaking whatsoever in terms of the Notification in question. Therefore, the question of denying the benefit of the Notification to the appellant who is a job worker, for the contravention, if any, committed by the supplier of the raw materials does not arise and consequently the benefit of Notification No. 214/86 cannot be denied to the appellant herein. No allegation in the show cause notice regarding availment of simultaneous benefit i.e. exemption contained in Notification No. 175/86 and benefit of Modvat credit both the authorities below have proceeded to record a finding on this aspect, which in my view, was uncalled for inasmuch as there was no such allegation in the show cause notice. They have, therefore, traversed beyond the scope of the show cause notice in so far as the alleged availment of simultaneous benefits in terms of Notification No. 175/86 is concerned. Even otherwise, SSI exemption under Notification No. 175/86 and Modvat credit can be availed simultaneously by a manufacturer but on different goods, in terms of the ruling rendered by the Tribunal in the case of Chandrapur Board Mills v. CCE, 1996 (11) TMI 219 - CEGAT, NEW DELHI . In the later decision, the Tribunal followed the decision of the Tribunal in the case of Swaraj Paint Industries v. Collector 1990 (8) TMI 280 - CEGAT, MADRAS which decision was challenged by the Revenue before the Hon ble Apex Court and the Apex Court dismissed the Civil Appeal No. 7955/95 filed by the Commissioner on 2-1-1996. In the present case, the goods admittedly fall under different headings. Therefore, on this score also, there cannot be any charge against the appellant. Thus, I hold that the impugned order is not legal and proper and I set aside the same and allow the appeal with consequential relief, if any. Ordered accordingly.

Summary

Issues involved:
The issues involved in the judgment are the contravention of Central Excise Rules by the appellant, demand of duty on job work done, denial of benefit of Notification No. 214/86 to the appellant, and alleged availment of simultaneous benefits under Notification No. 175/86 and Modvat credit.

Contravention of Central Excise Rules:
The appellant was alleged to have contravened Central Excise Rules by manufacturing and clearing FBC Boiler parts without determining the correct central excise duty leviable and without payment of Central Excise duty. The duty demanded was Rs. 31,294, with a penalty imposed in accordance with Section 11AC and Rule 173Q of the CE Rules, 1944.

Denial of Benefit of Notification No. 214/86:
The appellant undertook job work for suppliers of raw materials under Notification No. 214/86. The show cause notice alleged contravention by the appellant, but the responsibility of compliance with the notification was on the suppliers of the raw materials, not the job worker. The appellant returned processed goods to the suppliers, and the authorities should have sought details from the suppliers before demanding duty from the job worker.

Alleged Availment of Simultaneous Benefits:
Although there was no initial allegation regarding simultaneous benefit under Notification No. 175/86 and Modvat credit, both authorities below addressed this issue. However, simultaneous availment of SSI exemption and Modvat credit is permissible on different goods. The goods in question fell under different headings, so there was no basis for any charge against the appellant.

In conclusion, the appellate tribunal found that the impugned order was not legal and proper. The tribunal set aside the order and allowed the appeal, providing consequential relief if necessary. The responsibility of compliance with Notification No. 214/86 was on the suppliers of raw materials, not the job worker, and the alleged simultaneous benefits under different notifications were permissible. The judgment was pronounced in open court on 28-12-2004.