2018 (8) TMI 790 - AT - Central Excise

Job-Work - benefit of N/N. 214/86-CE - Department demanded duty on the ground that their suppliers of raw materials, BHEL and L&T Ltd. have not submitted undertaking as required under job work N/N. 24/86-CE. - Held that - All the conditionalities and requirements of Notification No.214/86-CE have been substantively complied with both by the principal manufacturers as well as by the appellants. Non-submission of undertaking by the principal manufacturers should then be considered as a curable defect. In any case, such undertakings have been subsequently filed by the said suppliers - Benefit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Whether the appellants are liable to pay Central Excise duty on goods cleared from their factory due to job work carried out by them?
- Whether the appellants have complied with the requirements of Notification No.214/86-CE?
- Whether the non-filing of declaration by the principal manufacturers should be considered a curable defect?
- Whether the case laws cited by the appellant support their case?
- Whether the impugned order imposing duty, interest, and penalty is sustainable?

Analysis:

Issue 1: Liability to pay Central Excise duty
The appellants, manufacturers of steel forgings, aluminum rings, and end-cutting scraps, undertook job work involving forging operations and machining of raw materials. The Department contended that the work amounts to "manufacture," requiring duty payment. A show cause notice was issued proposing duty demand, interest, and penalty. The original authority and Commissioner (Appeals) upheld the duty demand. The Tribunal found that the appellants had complied with the job work requirements under Notification No.214/86-CE, and the demand was set aside.

Issue 2: Compliance with Notification No.214/86-CE
The appellants submitted that they had complied with the notification's requirements, despite the suppliers not providing the necessary undertaking initially. The Tribunal noted that the appellants had fulfilled the conditions of the notification, and the non-submission of the undertaking by the suppliers was considered a curable defect. Letters from the principal manufacturers confirmed receipt of goods and further manufacture, supporting the appellants' case.

Issue 3: Curable defect of non-filing declaration
The Tribunal considered the non-filing of declaration by the principal manufacturers as a curable defect, especially since the suppliers subsequently filed the required undertakings. Citing precedent cases and the recent decision of CESTAT Chennai, the Tribunal held that the demand based solely on non-filing of declaration was excessive and set aside the impugned order.

Issue 4: Support from case laws
The appellants' reliance on various Tribunal decisions was found to support their case. The Tribunal referred to specific cases where similar issues were addressed, emphasizing that procedural requirements had been followed, and there was no diversion or misuse of goods. The Tribunal found no reason to deviate from the precedent set by the cited cases.

Issue 5: Sustainability of the impugned order
After considering the arguments and case laws presented, the Tribunal concluded that the impugned order imposing duty, interest, and penalty could not be sustained. The order was set aside, and the appeal was allowed with consequential benefits as per the law.

In conclusion, the Tribunal found in favor of the appellants, holding that they had complied with the job work requirements and that the demand for duty based on non-filing of declaration was unwarranted. The impugned order was set aside, and the appeal was allowed with consequential relief as per the law.