2016 (11) TMI 768 - AT - Central Excise

Benefit of N/N. 214/86 - job work - principal manufacturer not paid duty on job work goods - Held that - as per N/N. 214/86 the job worker is entitled to clear the goods without payment of duty in case duty has been paid by the principal manufacturer. The sole ground for denial of the benefit of N/N. 214/86 to the respondent by the Revenue is that the principal manufacturer has not paid duty. In fact as principal manufacturer has exported the goods under bond which means that duty is leviable on such goods but is not being paid for reasons of export therefore we hold that department has not understood the N/N. 214/86 in its true spirit. As the Ld. Commissioner (A) has properly examined the issue as recorded above we do not find any infirmity in the said order - respondent is entitled for benefit of N/N. 214/86 - appeal dismissed - decided against Revenue.

Issues Involved:
1. Entitlement to the benefit of Notification No. 214/86.
2. Whether the conversion of scrap into billets and bars qualifies as job work under Notification No. 214/86.
3. The impact of the principal manufacturer exporting goods under bond on the applicability of Notification No. 214/86.
4. Verification of the genuineness of certificates provided by hand tool manufacturers regarding the export of goods.

Detailed Analysis:

1. Entitlement to the Benefit of Notification No. 214/86:
The primary issue is whether the respondent is entitled to the benefit of Notification No. 214/86, which allows job workers to clear goods without payment of duty if the principal manufacturer has undertaken to discharge the duty liability. The Revenue contended that the benefit of the notification was not available because the principal manufacturers did not pay duty on the final products. However, the Tribunal found that the principal manufacturers had exported the goods under bond, implying that duty was leviable but not paid due to the export. This interpretation aligns with the notification's intent, as goods cleared for export are not exempt from duty but rather not charged due to the export.

2. Conversion of Scrap into Billets and Bars as Job Work:
The Tribunal examined whether the activity of converting scrap into billets and bars falls under the definition of job work as per Notification No. 214/86. The department argued that this conversion does not qualify as job work under the notification. However, the Tribunal referred to previous judgments, including the case of M/s Ambika Forgings, which established that such activities are covered under job work. The Tribunal concluded that the conversion process is indeed job work, and the benefit of Notification No. 214/86 should be extended to the respondent.

3. Exporting Goods Under Bond and Applicability of Notification No. 214/86:
The Tribunal addressed the contention that the principal manufacturers had not paid duty on their finished products because they were exported. The Tribunal clarified that goods exported under bond are still considered dutiable, and the non-payment of duty is due to the export. This interpretation was supported by the case of CCE Chd Vs Alpha Drugs (India) Ltd., where it was held that goods exported under bond without payment of duty are not the same as goods wholly exempt from duty. Therefore, the Tribunal held that the conditions of Notification No. 214/86 were met, and the benefit should be granted to the respondent.

4. Verification of Certificates Provided by Hand Tool Manufacturers:
The Tribunal also considered the verification of certificates provided by the hand tool manufacturers, which stated that the goods manufactured from the rectangular bars supplied by the respondent were exported. The jurisdictional Assistant Commissioners confirmed the genuineness of these certificates. The Tribunal noted that the department did not dispute the export of goods in the relevant period and that the certificates were verified and found to be authentic. This verification further supported the respondent's claim for the benefit of Notification No. 214/86.

Conclusion:
The Tribunal upheld the order of the Commissioner (A), granting the benefit of Notification No. 214/86 to the respondent. The Tribunal found that the department's interpretation of the notification was incorrect and that the conditions for the benefit were met since the goods were exported under bond. The appeal filed by the Revenue was dismissed.

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