2018 (12) TMI 241 - AT - Central Excise

Extended period of limitation - Liability to discharge duty by the job worker - Rule 4(5)(a) of the Cenvat Credit Rules, 2002 - The Larger Bench of this Tribunal has held that the job worker who received the goods for job work from their principal is required to discharge duty on the same. - Held that - Firstly, all the movements of inputs/raw materials from the principal manufacturer to the appellant s factory were in accordance with Rule 4(5)(a) of the Cenvat Credit Rules, 2002; also, the issue of liability to discharge duty on the processed goods by the job worker when the raw materials were received under Rule 4(5)(a) of the Cenvat Credit Rules, 2002, marred with conflicting views of this Tribunal resulting into the present reference to Larger Bench - the extended period of limitation cannot be invoked in the present case - appeal allowed - decided in favor of appellant.

Summary

Issues:
Liability of job worker to discharge duty under Rule 4(5)(a) of Cenvat Credit Rules, 2002 when principal manufacturer avails duty exemption under a notification.

Analysis:
1. The appeals were filed against an order passed by the Commissioner of Central Excise, Pune-I. The Tribunal decided most issues in favor of the appellant but referred the question of job worker's liability to discharge duty to the Larger Bench due to conflicting views.

2. The Larger Bench held that the job worker, M/s. Thermax Ltd., is liable to pay duty on the intermediate goods manufactured on a job work basis and supplied to their principal, M/s. Thermax Babcock & Wilcox Ltd. This decision was based on the job worker being a manufacturer of excisable goods.

3. The appellant argued that the demand for duty was barred by limitation as the show cause notice was issued after a significant delay. The appellant believed they were not required to discharge duty on materials received under Rule 4(5)(a) of the Cenvat Credit Rules, 2002. The appellant cited a judgment to support their contention.

4. The Revenue reiterated the findings of the Commissioner, but the Tribunal found that the issue had already been decided in favor of the appellant in one appeal. The only issue referred to the Larger Bench was the job worker's liability to discharge duty under Rule 4(5)(a) when following the job-work procedure.

5. The Tribunal acknowledged that the issue was decided against the appellant on merit but agreed that the extended period of limitation cannot be invoked in the absence of suppression and misdeclaration. The movements of inputs were compliant with the rules, and conflicting views on liability to discharge duty justified the lack of extended limitation period.

6. Consequently, the impugned order was set aside, and the appeals were allowed with any consequential relief as per law.