2017 (5) TMI 461 - AT - Central Excise

Manufacture - conversion of standard gold into Gold Potassium Cyandide (GPC) and Trivalent Gold Potassium Cyanide (TGPC) on job work basis - The case of the Revenue is that the appellant has failed to satisfy the conditions of job work as per N/N. 214/1986. Conversion of standard gold into GPC/TGPC amounts to manufacture since a completely new product emerges - Held that - The purpose of the job work N/N. 214/1986 is to shift the responsibility for payment of duty from the job worker to the principal manufacturer who gets goods manufactured from the job worker - In the present case, there are back to back job work transactions - since the gold plated crowns would have been utilized in the manufacture of watches by the principal manufacturer i.e., M/s. Titan Industries, and the same would have been cleared on payment of duty in terms of the undertaking given under N/N. 214/86, the terms of the job work Notification has been satisfied and there is no justification to demand duty from the appellant in the absence of any findings on record to the fact that there has been any diversion or non-accountal of the goods GPC/TGPC. - appeal allowed - decided in favor of appellant.

Summary

Issues: Liability to pay Central Excise duty on the quantity of GPC/TGPC used in the process of electroplating crowns on job work basis for M/s. Titan Industries.

Analysis:
1. The appellant, a manufacturer of watch crowns and mineral glasses, sent standard gold to a job worker for conversion into GPC and TGPC, as per Notification No.214/86-CE. The Revenue demanded duty on the quantity of GPC/TGPC used in electroplating crowns for M/s. Titan Industries.

2. The department argued that since the appellant failed to fulfill the conditions of the job work Notification, duty was payable on the GPC/TGPC used in electroplating. A show-cause notice was issued, demanding duty, interest, and penalty.

3. The appellant contended that duty was not justified as the crowns were used by M/s. Titan Industries in watch manufacturing, where duty was already paid. They also argued that the demand was time-barred and not revenue-neutral.

4. The Tribunal noted that the responsibility for duty payment on GPC/TGPC shifted to the appellant as the principal manufacturer. However, in the electroplating process for M/s. Titan Industries, no duty was paid on the gold used.

5. The Tribunal held that as the gold plated crowns were intended for watch manufacturing by M/s. Titan Industries, duty payment responsibility rested with them, satisfying the job work Notification terms. Since there was no evidence of diversion, the duty demand on the appellant was unjustified.

6. Consequently, the impugned order was set aside, and the appeal was allowed, emphasizing the fulfillment of job work Notification terms and the absence of any irregularity in the use of GPC/TGPC.

7. The judgment was pronounced in Open Court on 08/05/2017.