2024 (3) TMI 1225 - AT - Central Excise

Job-worker or manufacturer - Clearance of excisable goods of machine made dipped splints without payment of Central Excise duty and without following the job work procedures - whether the demand, interest and penalties imposed against the appellant is legal and proper? - HELD THAT - From the facts narrated in the impugned order, it can be seen that the appellant was supplied with raw materials by another manufacturer. The appellant is only engaged in manufacture of machine made dipped matches. They have not manufactured any packing materials. At the time of interference by the department officers at the site of the appellant they have obtained delivery challan which evidences that the goods were being sent to the principal manufacturer. Merely because the procedure adopted for job work as per Notification No.214/86-CE is not followed, the department cannot demand duty from the job worker. The Tribunal in the case of SREE RAYALASEEMA DUTCH KASSENBOUW LTD. VERSUS CCE., TIRUPATHI 2006 (6) TMI 505 - CESTAT, BANGALORE has held that unless it is proved that the raw materials were not supplied by the principal manufacturer, the department cannot demand duty from the job worker. It is also seen that the department had issued preliminary show cause notice to the principal manufacturer viz. M/s.Anja Lucifer Industries. The said party had filed an appeal before the Tribunal. The said party had opted for benefit of the Sabka Vishwas Scheme and had discharged duty as per the scheme. The principal manufacturer was thus issued discharge certificate and the appeal filed before Tribunal was dismissed accordingly. The goods therefore have already suffered duty at the hands of principal manufacturer. The demand against the present appellant cannot sustain and requires to be set aside - Appeal allowed.

Summary

Issues:
The issues involved in the judgment are whether the demand, interest, and penalties imposed against the appellant are legal and proper.

Issue 1: Compliance with Job Work Procedures

The appellant, engaged in the manufacture of safety matches, was found clearing machine-made matches without valid documents. The appellant argued that they were only a job worker and not a principal manufacturer, as raw materials were supplied by another manufacturer. The appellant contended that they were not aware of the job work procedure and did not comply with Notification No. 214/86-CE. Relying on a Tribunal decision, the appellant argued that if raw materials were supplied by the principal manufacturer, the job worker cannot be held liable for duty non-compliance. The Tribunal held that the demand cannot be made on the job worker merely due to procedural lapses if raw materials were supplied by the principal manufacturer.

Issue 2: Liability of Job Worker

The Tribunal emphasized that duty liability rests with the raw material supplier, not the job worker. Citing relevant legal provisions, the Tribunal clarified that a manufacturer can avail CENVAT credit on inputs sent to a job worker and that duty liability remains with the raw material supplier. The Tribunal set aside the demand against the appellant, noting that the goods had already suffered duty at the hands of the principal manufacturer who opted for the Sabka Vishwas Scheme.

Conclusion:

After considering the facts and legal arguments presented, the Tribunal found that the demand against the appellant was not sustainable. The impugned order was set aside, and the appeal was allowed with consequential relief, if any.