2015 (2) TMI 1054 - AT - Central Excise

Waiver of pre deposit - Demand of duty - principal manufacturer is coating HDPE on the fabrics processed by job worker - Held that - Tribunal in the case of another job worker in the case of SSM Processing Mills Vs CCE Salem - 2015 (2) TMI 1020 - CESTAT CHENNAI granted unconditional stay. - Following this decision we waive pre-deposit of entire amount of duty along with interest and penalty and stay its recovery till disposal of appeal. - Stay granted.

Summary

Issues:
1. Demand of duty on job worker for processing fabrics
2. Interpretation of Rule 96D of Central Excise Rules, 1944
3. Comparison with a similar case regarding duty waiver

Analysis:
1. The judgment deals with a case where the applicant, a job worker, processed grey cotton fabrics received from a principal manufacturer. The demand of duty amounting to &8377; 23,27,384 was imposed on the job worker on the basis that the principal manufacturer coated HDPE on the processed fabrics. The Tribunal referred to a similar case involving another job worker, where unconditional stay was granted on the duty demand. The Tribunal highlighted the provisions of Rule 96D, which govern the removal of processed fabrics without payment of duty for further processing. The Tribunal noted that the processed fabrics did not change identity at the hands of the job worker and that the HDPE coating was done by the principal manufacturer, thus supporting the job worker's case for duty waiver.

2. The Tribunal specifically referenced sub-rules (3) and (5) of Rule 96D in its analysis. Sub-rule (5) requires processed fabrics to be removed without payment of duty in accordance with sub-rule (3) when sent for further processing. Sub-rule (3) mandates following specific procedures when cotton fabrics are removed for processing at another factory. The Tribunal emphasized that the job worker followed the procedures as required by sub-rule (3) of Rule 96D. The Tribunal also noted that the processed fabrics did not lose their identity during the HDPE coating process, which was carried out by the principal manufacturer, thereby supporting the job worker's claim for duty waiver.

3. In light of the precedent set by the Tribunal in a similar case, where duty waiver was granted to another job worker, the Tribunal in this judgment decided to waive the pre-deposit of the entire duty amount, interest, and penalty for the current job worker. The Tribunal allowed the stay application, thereby halting the recovery of the duty until the appeal is disposed of. This decision was based on the finding that the job worker had a strong prima facie case for duty waiver, as the processing of fabrics did not alter their identity, and the HDPE coating was carried out by the principal manufacturer.

In conclusion, the judgment granted the job worker relief by waiving the duty demand, interest, and penalty, and staying the recovery process until the appeal is resolved, based on the interpretation of Rule 96D and the comparison with a similar case where duty waiver was allowed.