2019 (6) TMI 502 - AT - Customs

100% EOU - Duty free imports under N/N. 52/2003-CUS dated-March 31, 2003 - Job-work - Department took the view that the appellant s act of clearing chemicals imported by them under Notification No. 52/2003 did not satisfy conditions stipulated in para 4 of the Notification - HELD THAT - The Notification No. 52/03 provides for import of various goods for use in the manufacture of goods in 100% Export Oriented Unit for the purpose of export. As per terms of this notification, the appellant imported various goods for use in the manufacture of Fire Retardant garments. Para No. 4 (3 iii) of the said Notification permits the imported goods, to be taken outside the EOU for certain permissible processes including job work. After carrying out such processing goods are required to be returned to the unit for carrying out the remaining processes to ready the goods for export. The appellant sought permission under the above paragraph of the Notification for sending out certain goods for job workers. The expression of job work has been interpreted in liberal terms by the Tribunal and Hon ble High Courts. In the present case, the fire retardant chemicals imported duty free has been supplied to the job workers. Such chemicals were coated on the fabrics manufactured by the job workers. But it is seen that the Fabrics are shown to have been purchased by the appellant as evidenced by the invoices issued for such fabrics. In respect of the main job worker, M/s. JCT Faguara, it is further seen that the procurement of Fabrics from JCT is also supported by issue of CT-3 certificates issued by the Jurisdictional Superintendent for the appellant. This clearly evidences the fact that fabrics have been manufactured by JCT for supply to the appellant. The activity carried out at the premises of job workers will be squarely covered within the para 4 (iii) of the Notification under which due permission has been granted by the Development Commissioner. There is no dispute that the processed fabrics on which the imported chemicals coated has been duly received in the premises of appellant - there is no justification for raising the demand for Customs duty, not paid at the time of import on the chemicals. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Interpretation of the term "job work" under Notification No. 52/2003-CUS.
2. Allegations of violation of conditions under the Notification and CBEC circular.
3. Demand of customs duty, interest, and penalty.
4. Application of case laws in defining "job work."
5. Justification of the impugned order by the Department.
6. Consideration of materials supplied by the appellant to job workers.
7. Assessment of whether the activity qualifies as "job work" under the Notification.

Issue 1: Interpretation of the term "job work" under Notification No. 52/2003-CUS:
The case involved a dispute regarding whether the activity of coating fire retardant chemicals on fabrics at the job workers' premises qualified as "job work" under the Notification. The appellant contended that the term "job work" encompassed any activity carried out on materials supplied by them, even if all required materials were not provided.

Issue 2: Allegations of violation of conditions under the Notification and CBEC circular:
The Department alleged that the appellant did not satisfy the conditions stipulated in the Notification and CBEC circular regarding the clearance of imported chemicals duty-free. A show cause notice was issued proposing a demand for customs duty due to the perceived violation.

Issue 3: Demand of customs duty, interest, and penalty:
The adjudicating authority confirmed the demand for customs duty, interest under Section 28AB, and imposed a penalty equivalent to the customs duty under Section 114A. The appellant challenged this order in the present proceedings.

Issue 4: Application of case laws in defining "job work":
The appellant cited various case laws to support their argument that the definition of "job work" should be interpreted liberally. They emphasized that the activity at the job workers' premises fell within the scope of "job work" based on precedents and legal interpretations.

Issue 5: Justification of the impugned order by the Department:
The Department justified the impugned order by asserting that the activity did not meet the criteria of "job work" as defined under the CENVAT Credit Rules. They argued that the processing or working upon of raw materials or semi-finished goods supplied to job workers was essential for an activity to qualify as "job work."

Issue 6: Consideration of materials supplied by the appellant to job workers:
The dispute revolved around whether the fabrics, on which the fire retardant chemicals were coated, were supplied by the appellant or manufactured by the job workers themselves. The movement of fabrics and chemicals between the appellant and job workers was a crucial aspect of the case.

Issue 7: Assessment of whether the activity qualifies as "job work" under the Notification:
After considering the arguments and case laws presented by both sides, the Tribunal concluded that the activity carried out at the job workers' premises fell within the scope of "job work" permitted by the Notification. The Tribunal found no justification for the demand of customs duty on the imported chemicals, as the processed fabrics were duly received by the appellant.

This comprehensive analysis of the legal judgment highlights the key issues, arguments presented by both parties, relevant legal interpretations, and the final decision of the Tribunal.