2016 (3) TMI 199 - AT - Central Excise

Eligibility for benefit of duty under Notification No. 1/95 and 53/97 dated 13.6.1997 - Excisable goods liable duty - whether the goods cleared from the factory of the appellant are semi-finished goods sent for job-work and they are not goods produced or manufactured in a 100% EOU as contemplated under proviso to Section 3(1) read with Section 2(f) of the Central Excise Act, 1944? - Held that - The importer is required to use all goods imported for the purpose of manufacture of goods to be exported. Any articles (including rejects, waste and scrap raw material) if they are not excisable then they are required to payment of customs duty on imported goods used for the purpose of manufacture the said article in an amount to equal to customs duty leviable as for import as such. In the instant case, they had cleared fabrics, which they claimed to be semi-finished goods, for the purpose of job-work and the same were not returned. They are hit by clause (7) of the Notification Notification No. 1/95 and 53/97 dated 13.6.1997 read with erstwhile Rule 173M of Central Excise Rules, 1944 and as a result, duty is chargeable on the material cleared for job-work in terms of such clause. The order of Commissioner (Appeals) to that extent is according to the provisions of such Notification as he has ordered the matter to be remanded for determination of duty, if any involved in the semi-finished fabrics cleared to the job-workers - Decided against assessee

Summary

Issues:
1. Duty liability on Air Conditioners and Chenille Rugs
2. Duty liability on semi-finished fabrics cleared for job-work

Issue 1: Duty liability on Air Conditioners and Chenille Rugs
The appellants, an EOU engaged in textile manufacturing, were issued a notice to deny the benefit of a notification on Air Conditioners and Chenille Rugs. The demand was confirmed by the Jt. Commissioner, but the Commissioner (Appeals) set aside the order, except for recovery of duty admitted by the appellants for Air Conditioners. The Commissioner directed the adjudicating authority to re-determine the duty liability, considering that no duty on Chenille Rugs could be demanded as they were not manufactured in the appellant's factory. The appellant argued that the goods cleared were semi-finished goods sent for job-work and not manufactured in a 100% EOU, thus not excisable goods liable to duty. The Commissioner (Appeals) remanded the matter for the determination of duty on semi-finished fabrics cleared for job-work.

Issue 2: Duty liability on semi-finished fabrics cleared for job-work
The show-cause notice alleged that the appellants cleared Chenille Rugs for further processing to a sub-contractor, but not all goods were returned within the specified period, leading to a demand for customs duty. The provisions of the notification required all imported goods to be used for manufacturing goods for export. If articles were not excisable, customs duty on imported goods used for manufacturing such articles was payable. The appellants claimed the cleared fabrics were semi-finished goods for job-work and were not returned. They were deemed liable for duty under the notification's clause (7). The Commissioner (Appeals) ordered a remand for determining duty on the semi-finished fabrics cleared for job-work. The appeal was dismissed, upholding the duty liability on the semi-finished fabrics.

This judgment clarifies the duty liability concerning Air Conditioners, Chenille Rugs, and semi-finished fabrics cleared for job-work by an EOU engaged in textile manufacturing. The decision emphasizes the application of relevant notifications and provisions to determine duty liability on goods cleared for processing or job-work.