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2018 (1) TMI 719 - AT - Central ExciseWhether central excise duty can be recovered from the appellant where admittedly the appellant acted as a job worker who carried out processing activity on behalf of other persons? Held that - if the job worker obtain registration then only they are required to follow the provisions for payment of duty. It is optional for the job worker whether to obtain the registration and undertake to discharge the duty liability on the job work activity. If the job worker does not opt for obtaining the registration, no Excise duty liability can be made on the job worker, in such case the principal merchant manufacturer shall be liable to pay Excise duty. As per sub-rule (6) of Rule 12B, it is provided that the job worker shall not require to maintain any record, evidencing the processes undertaken for the sole purpose of undertaking job work - In view of sub-rule (6), the demand of duty on job worker cannot be made on the appellant being a job worker as he has not obtained the registration. The appellant being a job worker, of textile and textile article falling under Chapter 54 & 55 is not required to pay Excise duty in terms of Rule 12B - demand set aside - appeal allowed.
Issues Involved:
1. Liability of central excise duty on job workers. 2. Use of power in manufacturing and its impact on exemption eligibility. 3. Applicability of Rule 12B of the Central Excise Rules, 1994. 4. Limitation and suppression of facts. Issue-wise Detailed Analysis: 1. Liability of Central Excise Duty on Job Workers: The primary issue was whether the appellant, acting as a job worker, was liable to pay central excise duty. The appellant engaged in printing man-made fabrics and argued that under Notification No. 24/2003-C.E.(N.T.), the liability to pay duty was on the principal manufacturer. The Tribunal found that the appellant was indeed a job worker for merchant manufacturers, and as per Rule 12B of the Central Excise Rules, 1994, the duty liability rested on the principal manufacturer, not the job worker. The Tribunal cited several precedents, including Mallika Saree Processing vs. Commissioner of Central Excise and Diwan Saheb Fashions Pvt. Ltd., which supported this interpretation. 2. Use of Power in Manufacturing and Its Impact on Exemption Eligibility: The Revenue argued that the appellant used power in the manufacturing process, thus disqualifying them from exemption under Notification No. 07/2003-CE. The appellant contended that the use of power was inconsequential and should not affect their eligibility for exemption. The Tribunal did not find it necessary to delve deeply into this argument since the primary issue of duty liability was resolved in favor of the appellant based on Rule 12B. 3. Applicability of Rule 12B of the Central Excise Rules, 1994: Rule 12B explicitly states that if a job worker does not opt for registration, the liability to pay excise duty falls on the principal manufacturer. The Tribunal emphasized that the appellant had not opted for registration, thus reinforcing that the duty liability was on the principal manufacturer. The Tribunal also referred to a Board Circular and previous judgments to substantiate that job workers in the textile sector are not liable for excise duty unless they choose to register and take on the duty obligations. 4. Limitation and Suppression of Facts: The appellant argued that the demand was partially time-barred and there was no willful misstatement or suppression of facts. The show-cause notice did not charge the appellant with suppression of facts, and the appellant had disclosed their role as a job worker in their internal documentation. The Tribunal did not address this issue in detail since the primary issue was resolved in favor of the appellant on merits. Conclusion: The Tribunal concluded that the appellant, being a job worker, was not liable to pay excise duty under Rule 12B of the Central Excise Rules, 1994. The demand for duty was thus not sustainable. The impugned order was set aside, and the appeal was allowed. The judgment was pronounced in court on 11.01.2018.
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