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2021 (8) TMI 696 - AT - Central ExciseJob-Work - liability to pay service tax - job-worker or principal - activity of manufacture undertaken by the job-workers, availing exemption under Notification dated 09.07.2004 - HELD THAT - Both the Commissioner and the Assistant Commissioner adjudicated upon the show cause notices that proposed a demand for the same reasons. If the Department was aggrieved by the order dated 31.05.2018 passed by the Assistant Commissioner, an appeal could have been preferred but that was not done. It is for this reason that the submission advanced by learned Authorized Representative of the Department that since the subsequent order passed by the Assistant Commissioner does not discuss the earlier order dated 18.05.2016 passed by the Commissioner, the present appeal should be heard on merits cannot also be accepted. It has been held by a Division Bench of the Tribunal in POPULAR CARBONIC PVT. LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, CHENNAI-I COMMISSIONERATE 2021 (8) TMI 240 - CESTAT CHENNAI that if an order attains finality, the Department cannot take a contrary stand in the other pending appeals - In Popular Carbonic, a Division Bench of the Tribunal examined the contention raised on behalf of the appellant that since the order attained finality, the Department cannot be permitted to contend that the activity undertaken by the appellant would amount to manufacture. The submission made on behalf the appellant was accepted. The order passed by the Assistant Commissioner has attained finality, the Department cannot take a contrary view in this appeal. The confirmation of demand by the Commissioner cannot be sustained and is set aside - Appeal allowed.
Issues Involved
1. Whether the activity of manufacture undertaken by job-workers, availing exemption under Notification dated 09.07.2004, should be treated as if undertaken by the appellant as the principal manufacturer and consequently liable to pay Central Excise duty. Issue-wise Detailed Analysis 1. Whether the activity of manufacture undertaken by job-workers, availing exemption under Notification dated 09.07.2004, should be treated as if undertaken by the appellant as the principal manufacturer and consequently liable to pay Central Excise duty. The appellant is engaged in the manufacture of Nylon Yarn and Nylon Fishnet Twine. The Nylon Yarn is partly cleared for domestic consumption and partly used for further manufacturing within the factory. Due to inadequate facilities for making Hank Type Fishnet Twine, the appellant sends a portion of the internally manufactured Nylon Yarn to third-party job-workers for conversion into Nylon Fishnet Twine. These job-workers, who do not avail CENVAT credit on the duty paid Nylon Yarn, avail the exemption benefit under Serial No. 6 of the Notification dated 09.07.2004 and clear the converted Nylon Fishnet Twine without payment of duty. The Department alleged that the appellant attempted to evade payment of duty by getting the Nylon Fishnet Twine manufactured by job-workers and issued four show cause notices demanding Central Excise duty with interest and penalty. The Commissioner confirmed the demand by a common order dated 18.05.2016. The appellant argued that for subsequent periods, the Department issued two Statements of Demand but the Assistant Commissioner dropped the proceedings, concluding that the job-workers should be considered the real manufacturers of the goods. The relevant portion of the order stated that the manufacture of Twine takes place at the job-workers' premises, making them the manufacturers eligible for exemption under Notification no. 30/2004 – CE, dated 09-07-2004. The Assistant Commissioner’s order, which attained finality, concluded that the appellant is not the manufacturer of the twisted twine and hence, not liable to pay duty. The Department contended that the Tribunal should be guided by the earlier order dated 18.05.2016 passed by the Commissioner. However, the Tribunal held that since the order dated 31.05.2018 by the Assistant Commissioner has attained finality and the Department did not appeal against it, the Department cannot take a contrary stand in the present appeal. The Tribunal referenced several decisions, including Popular Carbonic Pvt. Ltd. vs. Commissioner of Central Excise, Chennai-I, Rosmerta Technologies Ltd. vs. Commissioner of CE & ST, LTU, Delhi, and Mohak Hi Tech Specialty Hospital vs. Principal Commissioner of Central Excise, Customs and Service Tax, Indore, M.P., which support the principle that once an order attains finality, the Department cannot take a contrary stand in other pending appeals. In conclusion, the Tribunal allowed the appeal, setting aside the Commissioner’s order dated 18.05.2016, and held that the appellant is not liable to pay duty on the Nylon Fishnet Twine manufactured and cleared by the job-workers.
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