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2023 (5) TMI 931 - AT - Central ExciseJob work - SSI Exemption - Benefit of N/N. 214/86-CE dated 25.03.1986 as amended by Notification No. 83/94-CE dated 11.04.1994 denied - neither the appellant nor the supplier of raw material has followed the conditions laid down in the said notification - Revenue was of the view that the appellant has wrongly availed the benefit of Notification 8/2003 as amended, on the goods so manufactured on job work basis as well as availed the benefit of Cenvat credit of the duty paid on inputs and cleared the same without payment of central excise duty. HELD THAT - The issue involved in the present case is no longer res integra. The Tribunal has in the case of VANDANA DYEING PVT LTD VERSUS COMMISSIONER OF CENTRAL EXCISE 2014 (8) TMI 441 - CESTAT MUMBAI has held that notwithstanding the fact that the process fabrics are not included in Notification 214/86, the job-worker is not liable to discharge excise duty liability and any liability thereon is required to be discharged by the supplier of the raw materials. Rule 4(6) of the Cenvat Credit Rules makes it abundantly clear that, if the goods are required to be cleared from the job-worker s premises instead of being returned to the supplier, then the Commissioner can direct clearance of the goods on payment of duty from job-worker s premises. This would also indicate that the liability to discharge duty under the provisions of Rule 4(5)(a) is on the supplier of the goods and not on the processor of the goods. In this view of the matter, we find that the impugned order is not sustainable in law and merits to be set aside. In the case of M/S. INAR PROFILES PVT. LTD. (FORMERLY KNOWN AS VISAKHA STEEL ALLIEDS) VERSUS COMMISSIONER OF CENTRAL EXCISE, SERVICE TAX AND CUSTOMS - VISAKHAPATNAM-II 2014 (4) TMI 297 - CESTAT BANGALORE it was held that the appellant is eligible for the benefit of Notification in respect of their supplies made to the SSI units. As regards contractors and traders, etc., the learned counsel drew our attention to the table submitted by them in reply to the show-cause notice wherein they had shown that if the clearances to third category of traders alone is taken in all the years under consideration by us, the total clearances made by the assessee would be less than the limit for total exemption prescribed by the SSI exemption Notification. The decisions relied in the impugned order are clearly distinguishable and do not come the way of holding that the benefit of Notification No. 214/86 dated 25.03.1986 as amended by Notification No. 83/94, 84/94 both dated 11.04.1994 cannot be extended in the present case in respect of the job worker. In above cases the demand has been made on the principal manufacturer i.e. the raw material supplier for whom the job work was carried out. Notification casts an obligation on the supplier of the raw material and not on the job worker to file such a declaration. The only reason for denial of the benefit of this notification as referred above is that the principal manufacturer i.e. the raw material supplier has not filed any declaration as required. The appellant in the present case could not have been held responsible for the failure of the supplier of raw material to give the undertaking as ascribed to the proper officer having jurisdiction over the factory of the job worker/supplier. Appeal allowed.
Issues Involved:
1. Demand of Central Excise duty. 2. Imposition of penalty under Section 11AC of Central Excise Act, 1944. 3. Compliance with Notification No. 214/86-CE and Notification No. 83/94-CE. 4. Availment of Cenvat credit and clearance without payment of duty. 5. Proper accounting and documentation under Central Excise Rules. 6. Determination of value under Central Excise Valuation Rules. 7. Submission of monthly returns and adherence to procedural requirements. Issue-wise Detailed Analysis: 1. Demand of Central Excise Duty: The appeal challenges the confirmation of Central Excise duty amounting to Rs. 13,36,872/- on the appellant under Section 11A(1) of the Central Excise Act, 1944. The demand was based on the appellant's failure to comply with the provisions of Notification No. 214/86-CE and Notification No. 83/94-CE, as neither the appellant nor the supplier of raw material followed the conditions laid down in these notifications. The Tribunal referred to previous judgments, including Vandana Dyeing Pvt. Ltd. and Inar Profiles Pvt. Ltd., which clarified that the duty liability in respect of goods moved under Rule 4(5)(a) is on the supplier of the goods and not on the job-worker. 2. Imposition of Penalty under Section 11AC: A mandatory penalty equal to the duty amount was imposed under Section 11AC of the Central Excise Act, 1944, read with Rule 25 of the Central Excise Rules, 2000. The appellant argued that penalties should not be imposed on the job worker for non-compliance by the principal manufacturer. The Tribunal supported this view, citing cases like Bharat Foundry and Sunco Rubber Ltd., where it was held that the job worker cannot be held liable for the principal's failure to comply with procedural requirements. 3. Compliance with Notification No. 214/86-CE and Notification No. 83/94-CE: The core issue was whether the appellant, as a job worker, was required to comply with the conditions of the aforementioned notifications. The Tribunal noted that the obligation to file declarations and undertakings rested with the supplier of raw materials, not the job worker. Previous rulings, such as those in Bharat Foundry and Sunco Rubber Ltd., reinforced that the job worker is not liable for the principal manufacturer's non-compliance. 4. Availment of Cenvat Credit and Clearance without Payment of Duty: The appellant was accused of availing Cenvat credit on inputs and clearing goods without payment of duty, thereby contravening various rules of the Central Excise Rules, 2002. The Tribunal found that the appellant's actions were consistent with the established practice of job work, where the duty liability is on the supplier of raw materials. 5. Proper Accounting and Documentation under Central Excise Rules: The appellant was found to have violated rules related to accounting and documentation, including failing to properly account for excisable goods in the daily stock account and clearing goods without valid invoices. The Tribunal acknowledged these procedural lapses but emphasized that the primary responsibility for compliance lay with the principal manufacturer. 6. Determination of Value under Central Excise Valuation Rules: The show cause notice demanded that the value of goods manufactured under job work and cleared without payment of duty be determined under Rule 11 read with Rule 6 of the Valuation Rules, 2000. The Tribunal reiterated that the duty liability for goods moved under job work lies with the supplier of raw materials, as established in previous cases like Vandana Dyeing Pvt. Ltd. 7. Submission of Monthly Returns and Adherence to Procedural Requirements: The appellant was accused of not showing the manufactured and cleared goods in their monthly returns (ER-1). The Tribunal noted that the appellant had not provided evidence of compliance with these procedural requirements but emphasized that the job worker's liability should not extend to the principal's procedural lapses. Conclusion: The Tribunal set aside the impugned order, allowing the appeal and holding that the job worker could not be held responsible for the principal manufacturer's non-compliance with the conditions of the relevant notifications. The duty liability and procedural compliance were the responsibility of the supplier of raw materials, not the job worker. The Tribunal's decision was consistent with previous rulings, ensuring that the legal obligations were correctly assigned.
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