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2021 (1) TMI 503 - AT - Central ExciseSSE Exemption - Clubbing of clearance - use of brand name of others - Job work - the case of the department is that the electrodes manufactured by M/S Orion Wire Manufacturing Company bear the brand name of the appellant s company - inclusion of such welding electrodes have to be included in the aggregate clearances of the appellant for the purpose of N/N. 8/2003 CE - HELD THAT - The appellant is the owner of the brand name Sun Arc . They are getting electrodes manufactured by the M/s Orion Wire Manufacturing Company on job work basis by supplying materials to them. The electrodes manufactured by the job worker are cleared from the job worker premises directly. Raw materials for the manufacture of the electrodes are supplied by the appellant. The duty on the electrodes is paid by the job worker on the price at which the goods are sold by the appellant to the buyers. The Value Added Tax is paid by the appellant. Retail invoices are also issued by the appellant in respect of this clearance from the Job premises. The notification prescribes that for the purpose of claiming exemption of this notification aggregate value of clearances of all excisable good for home consumption by the manufacturer from one or more factories or from a factory by one or more manufacturer does not exceed Rs. Four hundred Lakhs in the preceding financial years. For the purpose of calculating the aggregate value, the value of clearances bearing brand name or trade name of another person, which are ineligible for the brand of this exemption, are not to be included in the aggregate value. The notification further prescribed that where the specified goods manufactured by the manufacturer bear the brand name or trade name, whether registered or not, of another manufacturer or trader, such specified goods shall not, merely by reasons of the fact to be deemed to have been manufactured by such other manufacturer or trader. The appellant cannot be held to be manufacturer of goods and the job worker is the manufacturer in the facts of this case. The liability to pay duty arises at the end of the job worker and not at the end of the appellant although appellant is the supplier of the raw materials - in the facts of this case none of the provisions of notification 8/2003-CE are attracted which can enable revenue to include the value of clearances of goods manufactured by the job worker in the aggregate value of the clearances of the appellant. Thus, there is no substance in the argument of the revenue to hold that appellant are the manufacturer and the benefit of the Notification 8/2003-CE can be denied by including the value of clearances of goods manufactured by the job worker in the aggregate clearances of the appellant - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Inclusion of clearances made by the job worker in the aggregate clearances of the appellant for the purpose of Notification No. 8/2003-CE. 2. Determination of the manufacturer for the purpose of duty liability. 3. Applicability of the extended period of limitation. 4. Relevance of previous judgments and their applicability to the present case. Detailed Analysis: 1. Inclusion of Clearances Made by the Job Worker: The appellant argued that the welding electrodes manufactured by M/S Orion Wire Manufacturing Company on a job work basis should not be included in the aggregate clearances of the appellant for the purpose of Notification No. 8/2003-CE. The appellant supplied raw materials to the job worker, who manufactured and cleared the electrodes on payment of Central Excise duty. The appellant cited several tribunal decisions, including ARIHANT UDHYOG and THERMAX BABCOCK & WILCOX, which held that the job worker, being the manufacturer, is liable to pay duty, and the value of goods manufactured by the job worker should not be included in the principal's clearances for SSI Exemption purposes. 2. Determination of the Manufacturer for Duty Liability: The Departmental representative contended that the sales from the job worker's premises were done on behalf of the appellant, with VAT paid by the appellant and sales reported in the appellant's Profit and Loss Account. They argued that the appellant should be considered the manufacturer. However, the tribunal referred to the larger bench decision in THERMAX BABCOCK & WILCOX LTD, which clarified that the job worker, being the manufacturer, is liable to pay duty, and the ownership of goods is immaterial for duty liability purposes. The tribunal concluded that the appellant could not be held as the manufacturer, and the job worker is liable for duty. 3. Applicability of the Extended Period of Limitation: The appellant argued that the issue was barred by limitation, as the declaration was filed in 1999, and the investigation was conducted four years prior to the case. The Show Cause Notice was issued in 2010, despite the Revenue being aware of the arrangement since 2003. The tribunal agreed, noting that the declaration filed in 1999 disclosed the entire arrangement, negating any allegation of suppression or misdeclaration. Consequently, the extended period of limitation could not be invoked. 4. Relevance of Previous Judgments: The tribunal analyzed the applicability of previous judgments cited by both parties. The appellant relied on several tribunal decisions supporting their stance that the job worker is the manufacturer. The Departmental representative cited the Karnataka High Court decision in M/S. LAMINA INTERNATIONAL, which held that the manufacturer with control over the job worker is liable for duty. However, the tribunal distinguished the facts of the present case, noting that there was no full control or supervision by the appellant over the job worker, unlike in M/S. LAMINA INTERNATIONAL. Therefore, the ratio of M/S. LAMINA INTERNATIONAL was not applicable. Conclusion: The tribunal concluded that the appellant could not be considered the manufacturer, and the job worker was liable for duty. The clearances made by the job worker should not be included in the appellant's aggregate clearances for SSI Exemption. The extended period of limitation was not applicable due to the timely declaration by the appellant. Consequently, the appeal of M/S Orion Steel Corporation and Suryakant C Patel was allowed, and the impugned order was dismissed.
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