2015 (10) TMI 1565 - AT - Central Excise

Duty demand - Manufacture - Job works within the premises of principal - Demand notices were issued to the appellants demanding Central Excise duty on the ingots manufactured by them on the grounds that the appellant s are manufacturers in their own right and should have obtained separate registration - Held that - In the very same facts of the impugned case the tribunal has already held that the same activities are entitled to be treated as that of a job worker. The said decision of tribunal 2015 (7) TMI 183 - CESTAT MUMBAI drops the demand of duty on the waste cleared by the AEL to the appellants treating it as job work. Since the ratio of the case is squarely applicable to the present case the appellants have to be treated as independent manufacturers doing jobwork for AEL. Since the clearance of aluminium waste is treated as clearance for jobwork the same treatment is to be given to the material manufactured and returned by appellants. As a result the demands can not be sustained. - Decided in favour of assessee.

Summary

Issues: Central Excise duty demand on ingots manufactured within the premises of another company, classification of activities as job work or independent manufacturing, applicability of Cenvat Credit Rules, 2004 and Central Excise Rules, 2002.

Analysis:

1. Central Excise Duty Demand on Ingots: The appellants were engaged to convert waste materials into aluminium ingots within the premises of another company. The issue revolved around whether the appellants should be considered manufacturers in their own right and be liable for Central Excise duty. The Tribunal observed that the waste clearance by the other company to the appellants was treated as job work in a previous case. As a result, the appellants were also considered as job workers, and the demand for duty on the ingots manufactured by them was dropped.

2. Classification of Activities: The key point of contention was whether the appellants' activities constituted job work or independent manufacturing. The Tribunal referred to previous judgments to establish that if a job worker operates within the factory premises of the principal with their own capital goods, it qualifies as job work and not independent manufacturing. In this case, the job worker was found to be a manufacturer on a job work basis, and the removal of waste material for job work was not considered captive consumption.

3. Applicability of Cenvat Credit Rules and Central Excise Rules: The Tribunal analyzed Rule 4(5)(a) of Cenvat Credit Rules, 2004, and Rule 16(a) of Central Excise Rules, 2002, to determine that inputs sent for job work and used in the manufacture of final products cleared on duty payment are not liable for duty. The Tribunal further cited various judgments to support the view that waste generated during manufacturing can be sent to a job worker without duty payment if used in the production of dutiable goods. As a result, the demand for duty on the clearance of waste material was deemed unsustainable.

In conclusion, the Tribunal allowed the appeals, following the precedent set by a coordinate bench and holding that the appellants were to be treated as job workers rather than independent manufacturers. The judgment emphasized the application of relevant rules and legal principles to determine the non-liability of duty on the waste material clearance and the ingots manufactured through job work activities.