2017 (5) TMI 553 - AT - Central Excise

SSI exemption - job-work - The appellant did not include in the clearances of ₹ 76,70,795/- worth of readymade garments which were manufactured prior to March 2001, by job-worker, but cleared after 01.04.2001 while computing SSI clearances - case of appellant is that they never had a factory premises prior to 01.04.2001 and therefore the goods cannot be considered to be manufactured by them - Held that - identical matter has been decided by the Tribunal in K. Prashant Enterprises 2004 (1) TMI 544 - CESTAT, MUMBAI , where it was held that the raw material supplier (appellants) cannot be saddled with the duty liability to pay Central Excise Duty or with penalty. Larger Bench has prescribed that the duty liability arose prior to 01.03.2001 at the end of job worker. No duty liability would therefore arise at the end of principal manufacturer prior to 01.03.2001. Thus the goods which were lying in stock of the appellant cannot be charged to duty once again. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of duty on readymade garments under central excise regulation without SSI exemption.

Analysis:
The appeal was filed against the demand of duty on readymade garments by M/s. Alternate Clothing Co. The dispute arose when the appellant did not include the value of readymade garments worth &8377; 76,70,795/- cleared after 01.04.2001 but manufactured prior to March 2001 while computing SSI clearances. The duty amount of &8377; 12,27,327/- was alleged to be unpaid, leading to the confirmation of the demand by lower authorities along with an equivalent penalty.

Argument by Appellant:
The appellant's counsel contended that the goods cleared after 01.04.2001 were not to be included in the SSI limit calculation as they were manufactured prior to March 2001. They emphasized that the appellant did not have a factory premises before 01.04.2001, and thus, the goods cannot be considered as manufactured by them. Additionally, they highlighted that the brand name used was unregistered, which was not addressed in the show-cause notice or the impugned order. The appellant relied on the decision of the Larger Bench of Tribunal in a similar case to support their argument.

Argument by Respondent:
The respondent relied on circular no.B.4/5/2001-TRU, emphasizing that the value of all goods, regardless of the manufacturer, should be added for calculating the SSI exemption limit. They argued that the duty liability arose at the end of the job worker before 01.03.2001, absolving the principal manufacturer of duty liability for goods in stock.

Decision:
The Tribunal referred to the decision of the Larger Bench in a similar case and concluded that duty liability did not arise at the end of the principal manufacturer before 01.03.2001. As the goods were cleared on payment of duty by the job worker, the raw material supplier (appellant) could not be held liable to pay central excise duty or penalty. Consequently, the demand was set aside, and the appeal was allowed on 19/4/17.