2018 (5) TMI 475 - AT - Central Excise

Benefit of N/N. 4/2006-CE - notification prescribes the condition of process of manufacture of goods within the same factory whereas in the present case, the assessee had cleared kraft paper manufactured by them to a job worker for lamination process. Held that - the very issue has been addressed by the Tribunal in the case of ABC Paper Vs CCE Jallandhar 2015 (5) TMI 164 - CESTAT NEW DELHI , where the conversion of the pulp into paper rolls was done by the appellant therein on job work basis and therefore benefit of N/N. 4/2006-CE was denied to the appellant. However, the Tribunal has held that as the manufacturer undertaking to discharge duty liability on finished products and job work sending back paper rolls to manufacturer under job work challan without payment of duty, benefit of said exemption notification is not deniable to the manufacturer. Benefit cannot be denied - appeal dismissed - decided against Revenue.

Summary

Issues:
Interpretation of Notification No.4/2006-CE regarding the condition of manufacture in the same factory for concessional Excise Duty rate.

Analysis:
The case involved the respondents, manufacturers of craft paper and laminated kraft paper, who cleared laminated kraft paper at a concessional rate of Excise Duty under Notification No.4/2006-CE. The Department contended that the paper and articles made therefrom should have been manufactured in the same factory, which was not the case here. Show cause notices were issued proposing demands of differential duty, interest, and penalties. The Commissioner (Appeals) set aside the adjudication orders, leading to the department appealing before the forum.

During the hearing, the Appellant argued that the assessee violated the notification's condition by sending kraft paper to a job worker for lamination. Conversely, the Respondent's Advocate stated that the entire process of manufacturing kraft paper was done within their factory, and only the lamination process was outsourced, making them eligible for the notification's benefit.

The Tribunal referred to a similar case, ABC Paper Vs CCE Jallandhar, where the benefit of Notification No.4/2006-CE was allowed to the manufacturer even though the conversion of pulp into paper rolls was outsourced to a job worker. The Tribunal held that as long as the manufacturer undertook to discharge the duty liability on finished products and the job worker sent back paper rolls without duty payment, the exemption under the notification was applicable. Following this precedent, the Tribunal ruled in favor of the respondent, dismissing the department's appeals and upholding the impugned order.

In conclusion, the Tribunal found no infirmity in the impugned order, based on the interpretation of the notification and the precedent set by the ABC Paper case, leading to the dismissal of the department's appeals.