2000 (1) TMI 128 - AT - Central Excise

Summary

Issues Involved:
1. Liability of job workers to pay central excise duty on processed fabrics.
2. Interpretation of Rule 57F(4) of the Central Excise Rules, 1944.
3. Applicability of Notification No. 214/86.

Summary:

1. Liability of Job Workers to Pay Central Excise Duty on Processed Fabrics:
The appellants, engaged in heat setting and stentering of fabrics under Chapter 55 of the Central Excise Tariff Act, 1985, received goods from manufacturers for processing and returned them without paying central excise duty. The Department contended that these processes amounted to "manufacture" as per Chapter Note 4 of Chapter 55, requiring payment of basic excise duty and additional excise duty. The Commissioner confirmed this duty demand, rejecting the appellants' argument that they were not liable under Rule 57F(3)/57F(4).

2. Interpretation of Rule 57F(4) of the Central Excise Rules, 1944:
The appellants argued that Rule 57F(4) allowed them to return processed goods to the principal manufacturer without paying duty. They contended that the rule implied non-dutiability at the job worker's end, as duty would be paid when the principal manufacturer removed the goods for home consumption. The Tribunal majority agreed, interpreting Rule 57F(4) to mean job workers were not liable to pay duty when returning processed goods to the principal manufacturer. The dissenting opinion held that the job workers were liable for duty, as Rule 57F(4) did not explicitly exempt them.

3. Applicability of Notification No. 214/86:
The Commissioner and the Department argued that Notification No. 214/86 did not apply to the processed fabrics, as these were not specified as final products in the notification. The Tribunal majority found that the notification operated in a different field and was not applicable to the instant case. The dissenting opinion, however, emphasized that without specific exemption, the job workers were liable for duty.

Final Order:
The Tribunal, by majority, set aside the impugned order and allowed the appeal, concluding that the job workers were not required to pay duty on the processed fabrics returned to the principal manufacturers under Rule 57F(4).