2019 (2) TMI 1093 - AT - Central Excise

Process amounting to manufacture - unit had removed the goods on completion of job work without payment of duty under cover of challan - the unit was working under provision of Rule 4(5)(a) of the Cenvat Credit Rules and had not raised any excise invoice under Rule 11 of Central Excise Rules, 2002 - the grounds of appeal are essentially on the issue that the Commissioner has failed to examine if the process undertaken by M/s DASL and to ascertain if such processes amount to manufacture. Held that - It is seen that the ground of appeal do not deny the fact that M/s GMIL had not filed the requisite declaration under Notification 214/86-CE. The declaration filed by the principal manufacturer under Notification 214/86-CE is not a procedural kind of declaration but a substantial declaration in so far as it transfers duty liability from the job worker to the principal manufacturer. In these circumstances, it is obvious that without declaration being filed by M/s GMIL duty liability would remain with the job worker. In these circumstances, payment of duty by the job worker cannot be challenged. CENVAT Credit - supplementary invoices - Rule 9(b) of Cenvat Credit Rules - Held that - There is no allegation of suppression of fact, wilful misstatement, fraud etc., in the SCN - in absence of any charge of suppression, mis-declaration etc. provisions of rule 9(1)(b) cannot be invoked. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Duty payment on job work labor charges.
2. Commissioner's failure to determine if the activity amounts to manufacture.
3. Availment of cenvat credit on supplementary invoices.

Analysis:

Issue 1: Duty payment on job work labor charges
The appeal was filed by Revenue against the dropping of proceedings initiated against two appellants regarding duty payment on job work labor charges. The appellant started doing job work for another entity and raised supplementary invoices for job work labor charges. The Commissioner dropped the proceedings, leading to the appeal. The argument centered around whether the activity undertaken by the appellant amounts to manufacture, as duty payment was linked to this determination. The appellant had undertaken job work without payment of duty under a specific notification. The Commissioner's order was challenged on the grounds of lack of findings on the manufacturing activity. The Tribunal noted the arguments but upheld the Commissioner's decision, emphasizing the duty liability transfer under the notification.

Issue 2: Commissioner's failure to determine if the activity amounts to manufacture
The primary contention was whether the activity undertaken by the appellant constituted manufacturing, as this determination was crucial for duty payment. The respondent argued that historical duty payments and benefit availed under a notification supported the manufacturing nature of the activity. The Tribunal observed that the Commissioner failed to examine if the process amounted to manufacture. It was highlighted that the principal manufacturer had not fulfilled obligations under the notification, leaving the duty liability with the job worker. The Tribunal upheld the duty payment by the job worker in the absence of the required declaration by the principal manufacturer.

Issue 3: Availment of cenvat credit on supplementary invoices
The appeal sought to deny cenvat credit on supplementary invoices under Rule 9(b) of the Cenvat Credit Rules. The rule allows denial of credit in cases of non-levy due to fraud or misstatement. The Commissioner found no evidence of suppression or fraud in the duty payment process, leading to the dismissal of this ground of appeal. The Tribunal agreed with the Commissioner's analysis, stating that without allegations of suppression or misstatement, Rule 9(b) could not be invoked. Consequently, the appeals by Revenue were dismissed.

In conclusion, the Tribunal upheld the Commissioner's decision, emphasizing the duty liability transfer under the notification and the absence of suppression or misstatement in the duty payment process. The appeals by Revenue were dismissed on all grounds.