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2013 (4) TMI 473 - AT - Central ExciseJob work availing benefit of notification No. 214/86-C.E. - Cenvat Credit on inputs used by the Job Worker - Department contended that the benefit of Notification No. 214/86 was not available to him as such he was required to pay excise duty on the final product cleared by him and accordingly raised demand & penalty Held that - Admittedly, in this case the main raw material Alumina Hydrate was supplied by the principal manufacturer which was processed and treated by the respondent with Sulphuric Acid to manufacture the final product cleared without payment of duty. Therefore, in our opinion the process of manufacture adopted by the respondent squarely falls within the definition of job work . Otherwise also even if the benefit of Notification No. 214/86-C.E. was denied to the respondent that excise duty would have been passed on to Principal manufacturer who would have availed Cenvat credit on entire duty paid on Aluminium Sulphate cleared by the respondent. Therefore, analyzing from this angle also the entire exercise would have been revenue neutral. - Decided in favor of assessee.
Issues:
Interpretation of Notification No. 214/86-C.E. for excise duty exemption on job work basis. Detailed Analysis: Issue 1: Interpretation of Notification No. 214/86-C.E. The case involved a dispute regarding excise duty exemption under Notification No. 214/86-C.E. for job work done by a respondent. The respondent, a job worker for a principal manufacturer, used raw materials supplied by the principal manufacturer to manufacture a final product, Aluminum Sulphate. The department contended that since the respondent purchased one of the main raw materials, Sulphuric Acid, from the market, he was not eligible for the exemption and demanded duty payment. The jurisdictional Assistant Commissioner upheld the duty demand and imposed a penalty, which was later set aside by the Commissioner (Appeals). Issue 2: Comparison of Definitions of Job Work The Tribunal compared the definitions of "job work" under different notifications, emphasizing that the interpretation of job work under Notification No. 214/86-C.E. was crucial for this case. The Tribunal noted that the definition under this notification focused on processing or working upon raw materials supplied to the job worker to complete a part of the manufacturing process. This definition differed from the one in a previous judgment cited by the department, highlighting the specific requirements under the current notification. Issue 3: Compliance with Notification Requirements The Tribunal analyzed whether the job done by the respondent met the criteria set out in Notification No. 214/86-C.E. It was established that the respondent complied with the conditions specified in the notification, and the main raw material, Alumina Hydrate, was supplied by the principal manufacturer. The respondent processed this material with Sulphuric Acid to manufacture Aluminum Sulphate, the final product cleared without duty payment. The Tribunal concluded that the respondent's manufacturing process fell within the definition of job work as per the notification, making him eligible for the exemption. Issue 4: Revenue Neutrality Consideration Additionally, the Tribunal considered the revenue impact if the exemption was denied to the respondent. It was noted that if duty had been imposed on the respondent, the duty burden would have been passed on to the principal manufacturer, who could have availed Cenvat credit on the duty paid. This analysis indicated that the overall revenue impact would have been neutral, even if the exemption was not granted to the respondent. Conclusion: The Tribunal dismissed the department's appeal, upholding the Commissioner (Appeals) order that granted the benefit of Notification No. 214/86-C.E. to the respondent. The Tribunal found no fault in extending the exemption to the respondent based on the interpretation of job work under the notification. The decision was supported by the compliance of the respondent with the notification requirements and the consideration of revenue neutrality in the overall process.
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