2014 (12) TMI 537 - AT - Central Excise

Waiver of pre deposit - Job workers have been clearing the scrap also but the duty was being paid by the appellant - Liability of principal manufacturer - Revenue submitted that liability to pay duty is on the manufacturer and it cannot be shifted by any trade notice or permission issued to a manufacturer - assessee submitted that there are several decisions taking a view that in cases like this there is no duty liability on the principal-manufacturer at all - Held that - appellant has made out a prima facie case on merits. Accordingly, the requirement of pre-deposit is waived and stay against recovery of the dues during the pendency of the appeal is granted. - Following dcision of Mahindra Hinoday Industries Ltd. 2011 (9) TMI 139 - CESTAT, MUMBAI - Stay granted.

Issues:
1. Liability of principal-manufacturer for duty on scrap cleared by job workers.
2. Applicability of previous decisions on similar cases.
3. Interpretation of relevant legal provisions and precedents.

Issue 1: Liability of principal-manufacturer for duty on scrap cleared by job workers

The appellant, a manufacturer of iron and steel products, sent finished and semi-finished goods to job workers for further processing. The appellant cleared final products directly from the job workers' premises, with the job workers also clearing scrap. The appellant paid duty on the scrap based on their valuation. However, proceedings were initiated due to discrepancies in the valuation of the scrap. The impugned order held the appellant liable to pay a differential duty along with interest and penalty. The appellant argued that there should be no duty liability on the principal-manufacturer based on previous decisions. Notably, in the case of Mahindra Hinoday Industries Ltd., it was held that the liability to pay duty rests on the manufacturer and cannot be shifted by any permission or trade notice. This decision was found applicable to the current case.

Issue 2: Applicability of previous decisions on similar cases

The appellant's counsel cited various decisions supporting the view that there should be no duty liability on the principal-manufacturer in cases like this. One such decision was the case of Mahindra Hinoday Industries Ltd., emphasizing that the duty payment obligation remains with the manufacturer. In contrast, the Revenue relied on the decision of the Hon'ble Supreme Court in the case of General Engineering Works vs. CCE. However, it was noted that this decision was rendered under different CENVAT Credit Rules. The Tribunal found that the appellant had made a prima facie case on merits, leading to the waiver of the pre-deposit requirement and granting a stay against the recovery of dues during the appeal process.

Issue 3: Interpretation of relevant legal provisions and precedents

The Tribunal analyzed the legal provisions and precedents to determine the liability of the principal-manufacturer for duty on scrap cleared by job workers. The decision in the case of Mahindra Hinoday Industries Ltd. was deemed relevant, emphasizing the manufacturer's duty payment responsibility. The Tribunal also considered the changes in the CENVAT Credit Rules over time, highlighting the importance of understanding the specific legal framework applicable to the case at hand. Ultimately, the Tribunal granted a stay against the recovery of dues, recognizing the appellant's prima facie case on merits and the need for further examination during the appeal process.

This comprehensive analysis of the judgment covers the issues of liability, precedent applicability, and legal interpretation, providing a detailed overview of the Tribunal's decision in the case.

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