2016 (8) TMI 928 - AT - Central Excise

Whether the appellant was acting as a job worker for its sister unit and doing the job work of converting Iron Ore into iron and ore concentrate slurry and returning the goods to the sister unit (Principal manufacturer) was required to pay duty thereon - Held that - as far as the duty liability of a job worker in terms of Rule 57(F)(4) of Central Excise Rules, 1944 is concerned, it is settled upto the level of Supreme Court that the job worker was not required to pay duty. The language in both the Rules i.e. Rule 4(5)(a) and Rule 57(F)(4) gives no scope to infer that if the job worker was not required to pay duty in terms of Rule 57(F)(4) it could be required to pay duty in terms of Rule 4(5)(a) because the conditions of Rule 57(F)(4) were stringent compared to the conditions of Rule 4(5)(a) inasmuch as Rule 57(F)(4) categorically required the principal manufacturer to use the goods received from the job worker for further use in the manufacture of the final product or removing after payment of duty for home consumption or removing the same without payment of duty for export while Rule 4(5)(a) does not say so expressly though it is implicit therein. Thus, we are of the view that for the purpose of dutibility at the hands of the job worker, the provisions of Rule 57(F)(4) are essentially parimateria the Provisions of Rule 4(5)(a) of the Cenvat Credit Rules. - Decided in favour of appellant

Summary

Issues:
Whether duty liability of a job worker for converting Iron Ore into Iron Ore Concentrate slurry is required to be paid.

Analysis:
The appellant contended that as per Rule 4(5)(a) of the Cenvat Credit Rules, the duty liability remained with the sister unit sending the raw material for job work, and the job worker (appellant) was not required to pay duty. The appellant cited precedents and Board's Circular to support this argument.

The Revenue argued that in the absence of an Exemption Notification, goods manufactured by the appellant should be cleared on payment of duty, as the job work amounted to manufacture. The Revenue contended that Rule 4(5)(a) only pertained to Cenvat credit and could not be used to interpret the duty liability of a job worker.

The Tribunal examined the contentions and noted that the job work process undertaken by the appellant was held to amount to manufacture. The Tribunal analyzed Rule 4(5)(a) of the Cenvat Credit Rules and Rule 57(F)(4) of the erstwhile Central Excise Rules. It referred to a Board's Circular clarifying that duty liability for job work should be discharged by the principal manufacturer, not the job worker.

The Tribunal observed that the duty liability of a job worker under Rule 57(F)(4) was settled up to the Supreme Court level, stating that the job worker was not required to pay duty. The Tribunal found no scope to infer that a job worker should pay duty under Rule 4(5)(a) if exempt under Rule 57(F)(4). Precedents were cited to support this interpretation.

Regarding Revenue neutrality, the Tribunal clarified that it was relevant to determining willful misstatement/suppression, not the merit of duty liability. As the demand was raised within the normal period, Revenue neutrality did not impact the appeal. Consequently, the impugned order was set aside, and the appeal was allowed.