2009 (1) TMI 248 - AT - Central Excise

Job Work undervaluation of goods - It is the Revenue s case that the value of the grey fabrics as reflected in the said invoices produced by the merchant-manufacturers was not correct which has resulted in adopting of lower assessable value of the processed fabrics at the appellant s end and thus evasion of duty assessee submits that submit that the differential duty already stands paid by the merchant-manufacture as such he is not contesting the same held that - He further submits that the present appellant was not aware of the undervaluation of the grey fabrics at the end of the merchant-manufacturer in which case penalty should not be imposed upon them demand beyond the normal period of limitation dropped demand within the normal period of limitation confirmed interest and penalty waived.

Summary

Issues:
Undervaluation of processed fabrics leading to evasion of duty, applicability of limitation period, liability of job worker in cases of undervaluation, confirmation of duty, interest, and penalty.

Analysis:

1. Undervaluation of Processed Fabrics:
The appellants were involved in processing fabrics on a job work basis, adopting the assessable value based on invoices from merchant-manufacturers for grey fabrics. The Revenue alleged that the value of grey fabrics in the invoices was incorrect, resulting in the adoption of a lower assessable value by the appellants and duty evasion.

2. Applicability of Limitation Period:
The Revenue's case was challenged on the grounds of limitation, with the show-cause notice issued beyond the normal period. The appellants argued that they were not aware of the undervaluation by the merchant-manufacturers and had followed prescribed procedures. Citing relevant instructions and past decisions, the Tribunal found the demand beyond the limitation period to be barred.

3. Liability of Job Worker in Undervaluation Cases:
Referring to precedents such as Nikharka Dyg. & Ptg. and Vishnu Dyeing & Printing Works cases, the Tribunal held that job workers relying on declarations from traders cannot be held responsible for undervaluation if there is no evidence of collusion. The benefit of doubt was extended to the job worker in such cases, leading to the demand being considered as barred by limitation.

4. Confirmation of Duty, Interest, and Penalty:
While confirming the duty as uncontested due to payment by the merchant-manufacturers, the Tribunal set aside the confirmation of interest and imposition of penalty based on the issue of limitation. The appeals were disposed of with duty confirmed but interest and penalty being waived due to the limitation constraints.

In conclusion, the judgment addressed the issues of undervaluation, limitation period, job worker liability, and confirmed duty while waiving interest and penalty based on the limitation aspect and lack of evidence of collusion. The decision was based on relevant legal precedents and procedural adherence by the appellants.