2023 (11) TMI 164 - AT - Central Excise

Demand of excise duty on the casting manufactured - principal manufacturer has not accounted for the job work goods manufactured and supplied by them - HELD THAT - As per the documents referred by learned counsel, it is observed that the principal manufacturer M/s. Dyna Tex Enterprise has submitted necessary declaration / undertaking required under Notification No 214/86- CE and/ or Notification No 83/94 and 84/94- CE. Under the said notification the duty liability, if any arises, the same is recoverable from the principal manufacturer who has supplied the raw material to the job worker - It is also observed that the appellant have been receiving the goods under the job work challan and also clearing the processed goods under the subsidiary challan meant for job work goods. On this basis also no duty can be demanded from the appellant. However all the relevant documents needs to be verified to extend any benefit to the appellant. Goods which is other than job work and cleared by the appellant on their own without issuing invoices - HELD THAT - There is a force in the argument of the appellant that after deducting the value of job work goods if the value remains within the threshold limit of the SSI exemption under Notification No 08/2003 dated 01.03.2003 then the same will not liable to duty. However, this aspect also needs to be verified on the basis of the facts. The entire matter needs to be re-considered - Appeal allowed by way of remand.

Summary

Issues involved:
The issues involved in the judgment are liability of excise duty on job work goods, applicability of Notification No 214/86 dated 25.03.1986, Notification No 83/94 and 84/94 dated 11.04.1994, responsibility of principal manufacturer for duty payment, marketability of intermediate goods, and eligibility for SSI exemption under Notification No. 08/2003 dated 01.03.2003.

Liability of excise duty on job work goods:
The appellant, engaged in manufacturing casting on job work basis, faced a demand for excise duty on castings manufactured by them due to the principal manufacturer's failure to account for the job work goods supplied. The appellant argued that under Notification No 214/86 and Notifications No 83/94 and 84/94, they were not liable to pay duty on job work goods as the movement of goods was properly documented. They contended that the duty liability, if any, should fall on the principal manufacturer who supplied the raw material.

Responsibility of principal manufacturer for duty payment:
The appellant's counsel emphasized that the principal manufacturer should be responsible for duty payment, especially since the principal manufacturer had discharged the excise duty during the investigation. The appellant's role as a job worker processing intermediate goods, not marketable in their form, further supported their argument against being held liable for duty payment.

Applicability of SSI exemption under Notification No. 08/2003:
Regarding the goods manufactured by the appellant on their own, separate from job work goods, the appellant claimed eligibility for the Small Scale Industry (SSI) exemption under Notification No. 08/2003 dated 01.03.2003. They argued that after deducting the value of job work goods, the remaining turnover fell within the threshold limit of the exemption, thus exempting them from duty payment.

Judgment:
After considering the submissions and perusing the records, the Tribunal found that the principal manufacturer had submitted the necessary declarations as required by the relevant notifications. The Tribunal noted that the appellant received and cleared goods under proper job work challans, indicating compliance with prescribed procedures. The Tribunal agreed with the appellant's contention that duty liability, if any, should rest with the principal manufacturer who supplied the raw material.

The Tribunal also acknowledged the appellant's argument regarding the SSI exemption, stating that if the value of goods cleared by the appellant on their own fell within the exemption threshold after deducting job work turnover, duty exemption would apply. However, the Tribunal emphasized the need for further verification based on factual evidence.

As a result, the impugned order demanding excise duty was set aside, and the appeal was allowed for remand to the adjudicating authority for reconsideration in light of the Tribunal's observations.