2004 (3) TMI 275 - AT - Central Excise

Summary

Issues involved:
- Duty demanded and penalty imposed by the Commissioner of Central Excise on four appellants.
- Whether job workers or raw material suppliers are the manufacturers of the goods processed under Rule 57F(2)/(3).

Analysis:
1. The Commissioner demanded duty and imposed penalties on the appellants for not paying full duty while clearing fully manufactured goods processed at the premises of job workers. The issue is whether the job workers or raw material suppliers are the manufacturers of the goods processed under Rule 57F(2)/(3).

2. The appellants argued that the primary manufacturers (raw material suppliers) have obtained permission under Rule 57F(2) for processing and returning semi-finished goods. They cited relevant case laws supporting their plea for allowing the appeals.

3. The department contended that certain activities like de-flashing done by the primary manufacturer do not amount to manufacturing, referencing a Tribunal order in a similar case.

4. The Tribunal analyzed the activities of both the raw material suppliers and job workers to determine the manufacturing stage of the goods. It was crucial to understand Rule 57F(2) and the processes involved in manufacturing the goods.

5. The Tribunal found that the job workers contributed skills and tools for processing but the primary manufacturers undertook significant manufacturing processes like de-flashing, testing, and inspection. The goods were not fully manufactured at the job workers' premises.

6. Relying on legal precedents, the Tribunal concluded that the goods reached the fully manufactured stage at the hands of the raw material suppliers, not the job workers. The decision was based on the nature of activities performed by each party and the marketability of the goods.

7. Considering the above analysis, the Tribunal held the impugned order demanding duty and penalty as not legal and proper. The appeals were allowed with consequential relief, if any, in favor of the appellants.