2008 (6) TMI 511 - AT - Central Excise

Duty liability - Job work - removal of scrap - Held that - There is no denial of the fact that the scarp was removed from the job workers premises. In such a circumstance the department ought to have raised demand on the job worker and not on the suppliers of the raw material - appeal allowed.

Summary

Issues:
1. Duty liability on removal of scrap by job worker.
2. Time-barred demands.

Issue 1: Duty liability on removal of scrap by job worker
The appeal involved a dispute regarding the duty liability on the removal of scrap by a job worker. The audit revealed that the appellant had removed semi-finished inputs for processing to their job worker and had recovered the cost of scrap generated at the job worker's premises. The department raised demands after two years of the audit report submission, holding the appellant liable for duty on the scrap. The appellant argued that the duty liability should be on the job worker, not them. The learned Counsel cited precedents, including the judgment in Preetam Enterprises v. CCE, Pune, which emphasized that duty liability for waste and scrap generated at job workers' premises should be on the job workers, not the raw material suppliers. The Tribunal agreed with this argument, stating that the duty liability should be on the job worker when scrap is removed by them. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

Issue 2: Time-barred demands
The appellants also contended that the demands raised by the department were time-barred as they were initiated after a lapse of two years from the audit report submission. However, the primary focus of the judgment was on the duty liability issue regarding the removal of scrap by the job worker. The Tribunal did not delve deeply into the time-barred aspect of the demands due to the clear resolution of the duty liability issue in favor of the appellant. As a result, the time-barred demands issue was not extensively discussed in the judgment, and the decision primarily revolved around the duty liability aspect.

In conclusion, the Appellate Tribunal CESTAT, Bangalore, in the cited judgment, addressed the duty liability concerning the removal of scrap by a job worker, ruling in favor of the appellant based on established precedents. The Tribunal emphasized that duty liability for scrap generated at job workers' premises should be on the job workers, not the suppliers of raw materials. The time-barred demands issue raised by the appellants was not extensively discussed as the resolution of the duty liability matter was central to the judgment.