2017 (3) TMI 1770 - AT - Central Excise

Demand of excise duty - principal-job-worker relationship - case of Department is that the appellant has supplied the raw material and hired the labour in the name of the job worker so the composite duty was demanded by the department from the appellant - HELD THAT - The impugned order appears to be ambiguous on the aspect whether the relationship between the appellant and job worker was principal to principal or not . The impugned order is silent about the nature of the job work. This can be verified by him whether job charges or the labour charges were paid. Matter remanded to the adjudicating authority to decide the issue denovo but by providing an opportunity of hearing to the assessee - appeal allowed by way of remand.

Summary

Issues:
1. Classification of relationship between appellant and job worker for duty payment.

Analysis:
The appeal was filed against an order passed by the Commissioner of Central Excise, Jaipur-II, regarding the appellant's engagement in manufacturing Stone Crusher Machines and parts thereof during the period from April 2007 to August 2009. The appellant had engaged other manufacturers for manufacturing activities on a job work basis, supplying raw materials to them. The department contended that this constituted a principal to job worker relationship, demanding composite duty from the appellant. The appellant challenged this view, claiming the job worker was an independent entity responsible for duty payment on goods manufactured. Both parties presented their arguments, with the appellant asserting the independence of the job worker, while the Revenue argued that the appellant had hired the labor, which was then sold by the appellant.

Upon review, the Tribunal found the impugned order to be ambiguous regarding the nature of the relationship between the appellant and the job worker, specifically whether it was principal to principal. The order did not clarify whether job charges or labor charges were paid, leading to uncertainty. Consequently, the Tribunal set aside the order and remanded the matter to the adjudicating authority for a fresh decision, emphasizing the need for a clear determination on the relationship issue. The Tribunal directed the authority to provide the appellant with a hearing opportunity and allowed the admission of additional evidence if required by law. Ultimately, the appeal was allowed by way of remand, ensuring a thorough reconsideration of the matter with all relevant aspects duly addressed.