2016 (8) TMI 4 - AT - Central Excise

Duty liability - job worker is liable to discharge the liability or the principal - related parties - dummy job workers - Held that - the respondents cannot escape from their liability of payment of Central Excise duty in this case, especially when for the purpose of Central Excise, there is a clear-cut finding that respondents and their job worker viz., M/s. Ashok Bagi and Associates are one and the same having common interest. When the respondents have structure and stratagem in order to evade payment of duty of Central Excise it becomes necessary to go beyond such a structure and stratagem and lift the veil of structure in order to see what are the clear-cut facts; consequently the respondents cannot be allowed to escape, when they have not paid the dues of Central Excise. However, teir plea of giving benefit of Notification No.8/2003 C.E. dated 1.3.2003 deserves acceptance and the liability of payment of duty for the subject goods has to be computed after granting the benefit of Notification No.8/2003-C.E. - Decided partly in favor of assessee.

Summary

Issues:
Clearance of goods without payment of Central Excise duty and without obtaining Central Excise Registration.

Analysis:
The case involves an appeal filed by the Commissioner of Central Excise, Belgaum against the order of the Commissioner (Appeals) regarding the clearance of goods without payment of Central Excise duty and registration. The main argument by the appellant is that the job worker and the respondents are related, while the Commissioner (Appeals) held they are not. The appellant also contends that the job worker and the respondent are not distinct entities but one concern with common interests. The respondents argue that they are traders, and duty liability lies with the job workers. The appellant cites the decision of the Hon'ble Supreme Court in the case of Shree Agency to support their argument. The respondents obtained Central Excise registration later and discharged their duty liability for certain years.

The Tribunal carefully considered the arguments presented by both parties. The appellant claimed that the respondents and the job worker are the same entity, while the respondents argued they are independent, and duty liability rests with the job workers. The Tribunal noted the findings of the Order-in-Original, which indicated that the respondents and the job worker were not distinct identities but one entity with common interests in manufacturing and clearance of goods. The Tribunal found that the decisions cited by the respondents were not applicable to the facts on record, as evidence suggested the respondents were also manufacturers, not just traders.

The Tribunal concluded that the respondents could not evade their liability for Central Excise duty, especially when evidence indicated they and the job worker were one entity. The Tribunal emphasized the need to look beyond the structure created to evade duty payment. The respondents' plea for exemption under Notification No.8/2003-C.E. was accepted, and the liability for payment of duty had to be computed after granting the benefit of the said notification. The appeal was allowed by remand to the original adjudicating authority for further proceedings in line with the Tribunal's conclusions.