2018 (2) TMI 1385 - AT - Central Excise

Liability of duty - job-work - lunch carry bag under the brand name of Tupperware - Held that - since the duty liability is essentially on the manufacturer, i.e. job-worker in the present case, the duty liability will need to be recovered from them. The appellant cannot be held liable for payment of such duty for the period prior to such undertaking - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
Classification of goods under Central Excise Tariff Act, liability for payment of duty, interpretation of Notification No. 30/2004, responsibility of job worker for excise duty.

Analysis:
The case involves an appeal against an order passed by the Commissioner of Central Excise (Appeals)-I, New Delhi, for the period between 2008 and February 2010. The appellant, engaged in manufacturing lunch carry bags under the brand name "Tupperware," classified the product under Central Excise Tariff Act, 6305 3900. Prior to March 1, 2011, goods under Chapter 63 were exempt from excise duty under Notification No. 30/2004-CE. However, an amendment in Notification No. 12/2011 restricted the exemption to goods not bearing a brand name. The dispute arose when the Department issued a show cause notice in 2014 proposing to reclassify the goods under Chapter heading 4202, making them liable for duty. The appellant took registration from March 1, 2011, and agreed to pay duty, but the Department demanded duty for the period before that, leading to the present appeal.

During the hearing, the appellant argued that duty payment was required only from the date of filing the undertaking as per job work Notification No. 214/86, which was done from March 1, 2011. The appellant contended that the duty liability should be on the job workers who were the actual manufacturers of the goods before that date. On the contrary, the Revenue argued that since the goods were manufactured and cleared by the appellant even before March 1, 2011, the duty liability falls on the appellant due to the absence of the benefit of Notification No. 30/2004.

The Tribunal observed that the goods were indeed manufactured and supplied under the brand name "Tupperware," making them ineligible for exemption under Notification No. 30/2004 if classified under Chapter 63. The key issue was determining the party liable for paying the duty. The Tribunal noted that the job workers were the actual manufacturers, and as per Notification No. 214/86, the principal manufacturer could undertake to discharge the duty liability by submitting an undertaking. In this case, the appellant filed the undertaking only from March 1, 2011, and had paid duty accordingly. Therefore, the Tribunal held that the duty liability for the period before the undertaking was filed should be recovered from the job workers, absolving the appellant from payment for that period.

Consequently, the Tribunal set aside the impugned order and allowed the appeal, emphasizing that the duty liability primarily rested with the job workers, and there was no justification for demanding duty from the appellant for the period before March 1, 2011.