2015 (11) TMI 509 - AT - Central Excise

Duty demand - CENVAT Credit - duty liability of made-ups - Held that - Appellants are not disputing the duty liability. All that what they are asking is the credit of the duty paid on the inputs should be given on actual basis rather than deemed basis. In view of this position, as far as this issue is concerned, we remand the matter to the original authority. The appellant will produce the copies of the invoices to the original authority, who after examining the invoices, will determine the eligibility of the CENVAT credit and thereafter net duty liability through PLA. The duty liability is on the manufacturer. Ownership of the input material is of no consequences. In the present case, it is an admitted position that the made-ups are not manufactured by the appellant but by the job-workers. Hence the duty liability will be with the job-worker and not with the appellant. - Demand is set aside - Decided in favour of assessee.

Summary

Issues:
1. Duty liability on garments manufactured between May 2001 to March 2003 - CENVAT credit on actual basis.
2. Duty liability on made-ups manufactured between August 1998 to March 2003 - liability of job-workers.

Analysis:

Issue 1: Duty liability on garments manufactured between May 2001 to March 2003 - CENVAT credit on actual basis:
The appellant, a division of National Textile Corporation Ltd., admitted duty liability for garments manufactured during the specified period. However, they sought CENVAT credit on an actual basis instead of a deemed basis, as determined by the authorities. The Tribunal acknowledged the appellant's request for actual credit and remanded the matter to the original authority for verification based on invoices. The decision emphasized granting credit on actual duty paid inputs rather than a deemed basis, ensuring accurate determination of duty liability through PLA.

Issue 2: Duty liability on made-ups manufactured between August 1998 to March 2003 - liability of job-workers:
Regarding duty liability on made-ups manufactured during the mentioned period, the appellant argued that the duty liability rests with the job-workers who converted the duty-paid fabrics into made-ups, not with the appellant who supplied the fabrics. The Tribunal agreed with the appellant's stance, emphasizing that the duty liability lies with the manufacturer, in this case, the job-workers. As the made-ups were not produced by the appellant but by the job-workers, the duty liability rightfully belonged to the job-workers. The Tribunal highlighted the amendment in Rule 12B from 01/04/2003, stating that the appellant had been paying duty from that date onwards. Consequently, the demand on the duty liability for made-ups was deemed unsustainable and set aside.

In conclusion, the Tribunal's decision on both issues resulted in changes to the interest and penalty amounts. The appeal was disposed of based on the considerations outlined above, providing clarity on duty liabilities for garments and made-ups manufactured during the specified periods.