2018 (2) TMI 2095 - AT - Central Excise

Levy of Excise Duty - body cover of the diesel generating sets - demand is confirmed against the appellant who is the principal manufacturer - evasion of duty - HELD THAT - The appellant is receiving the acoustic enclosures (cover) which is manufactured by M/s. SBN Engineering Works as job worker on the request of the appellant who is the principal in the instant case. Regular payment is being made by the appellant to the job worker. Principal manufacturer i.e. the appellant has not given any undertaking to take the responsibility for payment of the duty. At the same time, the job worker has also not paid the duty. To protect the interest of the Revenue, the duty will have to be paid by someone. In the instant case, the appellant is the principal and by not giving the undertaking, the appellant has developed a system to evade payment of Central Excise duty. By connivance of two parties, sovereign function of payment of duty cannot be avoided - In the instant case, the principal and the job worker with a conspiracy as stated above have made an attempt to evade the payment of duty. They tried to take advantage of the technicality of the law. There are no infirmity in the impugned order and the same is hereby sustained - appeal dismissed.

Summary

Issues:
- Duty liability on the appellant for diesel generating sets' body cover
- Responsibility for payment of Central Excise duty in job work scenario
- Alleged evasion of duty payment through connivance of principal and job worker

Analysis:
The appeal was filed against Order-in-Appeal No. 106/2007, concerning the duty liability of the appellant for the period from 1-4-2000 to 4-6-2002. The appellant, engaged in manufacturing Diesel Generating sets, used Acoustic Enclosures as body covers from M/s. SBN Engineering Works on a job work basis. Despite no duty payment by either the appellant or the job worker, the demand was confirmed against the appellant, the principal manufacturer, as per the records. The appellant contested the demand, leading to the present appeal.

During the hearing, it was established that the appellant received the acoustic enclosures from M/s. SBN Engineering Works, the job worker, at the appellant's request. Regular payments were made by the appellant to the job worker, but no duty undertaking was given by the appellant. Similarly, the job worker did not pay the duty as well. The tribunal noted that in such scenarios, someone must bear the duty liability to protect the Revenue's interest. The appellant, as the principal, was found to have devised a system to evade duty payment by not assuming responsibility, leading to an attempt to avoid payment through a conspiracy between the principal and the job worker.

Ultimately, the tribunal upheld the impugned order, citing no flaws and sustaining it along with the provided reasons. The appeal filed by the appellant was consequently dismissed, affirming the duty liability on the appellant for the diesel generating sets' body covers. The judgment was delivered on 6-2-2018 in open court.