2011 (4) TMI 161 - AT - Central Excise

Benefit of Notification No. 214/86-CE dated 25.03.86 - Sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goods specified in column (2) of the Table hereto annexed (hereinafter referred to as the said goods) manufactured in a factory as a job work and used in or in relation to the manufacture of final products (on which duty of excise is leviable whether in whole or in part) specified in column (3) of the said Table, from the whole of the duty of excise leviable thereon, which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) - Held that even an incomplete article or a complete article which requires finishing by a job worker will be eligible to the benefit of the Notification - Allow the appeal of assessee.

Summary

Issues:
Interpretation of Notification No. 214/86-CE regarding applicability to unmachined castings cleared to job workers for further processing.

Analysis:
The judgment by the Appellate Tribunal CESTAT, CHENNAI involved a demand of Rs. 7,42,537/- confirmed against the assessees, who are manufacturers of Power Driven Pumps and unmachined castings of Iron, steel, and stainless steel. The issue arose from the denial of the benefit of Notification No. 214/86-CE dated 25.03.86 to the assessees for unmachined castings cleared to job workers for further processing. The Tribunal examined the scope of the notification, which exempts specified goods manufactured in a factory as a job work and used in the manufacture of final products. The crux of the matter was whether unmachined castings already manufactured by the assessees themselves could avail of the notification intended for goods manufactured by job workers.

The Tribunal analyzed the language of the notification, particularly the definition of job work, which includes processing or working upon raw materials or semi-finished goods supplied to the job worker to complete a part or whole of the process resulting in the manufacture or finishing of an article. The Tribunal emphasized that the notification applies to goods that are essential for the manufacturing process, including incomplete articles or those requiring finishing by a job worker. Based on this interpretation, the Tribunal held that the benefit of Notification No. 214/86-CE is admissible to the assessees for unmachined castings. Therefore, the impugned order confirming the demand was set aside, and the appeal was allowed in favor of the assessees.

In conclusion, the judgment clarifies the applicability of Notification No. 214/86-CE to unmachined castings cleared to job workers for further processing. The Tribunal's interpretation of the notification's language and the definition of job work played a crucial role in determining the eligibility of the assessees for the exemption. By emphasizing the essentiality of goods for the manufacturing process, the Tribunal ruled in favor of the assessees, granting them the benefit of the notification and overturning the demand confirmed against them.