2017 (11) TMI 1265 - AT - Central Excise

Benefit of N/N. 214/86-CE dated 25.03.1986 - Revenue entertained a view that M/s Bajrang Wire Products (India) Pvt. Ltd. are not eligible for exemption under N/N. 214/1986 as the final product manufactured by the principal manufacturer are exempt under N/N. 50/2003-CE - Held that - the letter of letter of the jurisdictional authority of the principal manufacturer would make it clear that the benefit of N/N. 214/1986 cannot be denied to either of the appellants. The finished goods manufactured by M/s Sterlite Technologies Ltd using the job work processed goods by M/s Bajrang Wire Products (India) Pvt Ltd were claimed to be cleared for export or deemed export. These were excluded categories of clearance of finished goods which will not bar the eligibility for the said notification. This aspect has been categorically asserted by the Jurisdictional Commissioner of principal manufacturer. However, the original authority in Jaipur still proceeded to confirm the demand by denying the exemption. As such, the impugned order is unsustainable. The original authority should re-examine all the aspects and in consultation with the jurisdictional authority of the principal manufacturer, should verify the facts as claimed by the appellants regarding the export and deemed export of finished goods before taking a fresh decision - appeal allwoed by way of remand.

Summary

Issues:
Duty liability under Notification No.214/1986 for job work processes; Denial of exemption under Notification No.214/1986; Denial of procedural requirements; Denial of export/deemed export of finished goods; Demand hit by limitation; Proper examination of documents supporting clearances; Legal correctness of jurisdictional authority's letter; Scope of show cause notice; Exclusion of categories of finished goods from exemption.

Analysis:
The case involved appeals against impugned orders related to the duty liability of a company engaged in job work activities. The dispute centered around the denial of exemption under Notification No.214/1986 to the company. The original authority based its denial on the grounds that the manufacturer was availing area-based exemption and procedural requirements were not followed. The audit officers raised concerns about the eligibility for exemption, leading to a detailed reply from the jurisdictional Commissioner of the principal manufacturer, emphasizing the substantial value addition by the job worker and confirming the eligibility for the exemption.

The jurisdictional authority's letter highlighted the significant role of the job worker in the production chain and clarified that the job worker fulfilled the conditions of the exemption notification. Despite this clarification, the original authority questioned the reliability of documents supporting export or deemed export of finished goods by the principal manufacturer. The Tribunal criticized the original authority for disregarding the jurisdictional Commissioner's letter and proceeding to interpret legal issues independently, going beyond the show cause notice's scope and imposing penalties.

The Tribunal emphasized that the exclusion of certain categories of finished goods from the exemption would not affect eligibility. It directed the original authority to re-examine all aspects in consultation with the jurisdictional authority, verify the export claims, and provide the appellants with opportunities to present their case. Ultimately, the impugned orders were set aside, and the matter was remanded for a fresh decision, allowing the appeals.

In conclusion, the Tribunal's decision highlighted the importance of proper examination of facts, consultation with relevant authorities, and adherence to procedural requirements in determining duty liability and exemption eligibility under Notification No.214/1986 for job work processes.