2010 (4) TMI 286 - HC - Central Excise

Job worker liability of pay excise duty receipt of material under 57F(2) / 57F(4) challans It is the case of the Revenue that the job worker would be liable to pay central excise duty, specially, when he has received the raw material against the challan under rule 57F(2) of the Rules and not the final manufacturer of the end product. Held that - , it is the manufacturer of the final product who is claiming modvat credit. The job worker is not entitled to claim any credit and no credit has been claimed by him. - job workers who receive inputs from principal manufacturers under challans issued under rule 57F(4), as this rule stood during the relevant period, and returned the said goods after carrying out the process of heatsetting and strentering on job work basis to the principal manufacturer were not required to pay duty on the goods so returned during the period in question.

Summary

Issues:
Whether a job worker is liable to pay central excise duty when receiving raw material against challans under Rule 57F(2) of the Central Excise Rules, 1944.

Analysis:
The case involves the question of whether a job worker is liable to pay central excise duty when receiving raw material against challans under Rule 57F(2) of the Central Excise Rules, 1944. The facts of the case revolve around an assessee engaged in the manufacture of hot rolled untrimmed sheets/circles of copper and copper alloy, undertaking job work for other manufacturers. The suppliers sent raw material for job work under Rule 57F(2), and after completing the job work, the semi-finished material was returned to the manufacturer without payment of duty. The Revenue contended that the job worker should pay central excise duty, particularly when receiving raw material against challans under Rule 57F(2) and not the final manufacturer of the end product.

The Tribunal referred to a precedent in M.Tex & D.K.Processors (P) Ltd. vs. Commissioner of C.Ex., Jaipur, where it was held that job workers receiving inputs from principal manufacturers under challans issued under rule 57F(4) were not required to pay duty on the goods returned after processing. This decision was upheld by the Apex Court in Civil Appeal No.3709-3710 of 2000 and similar cases. Therefore, the Tribunal concluded that the job worker in the present case, who is not claiming any credit, is not liable to pay central excise duty on the goods returned after job work processing.

In light of the precedent and the decision of the Apex Court, the High Court ruled in favor of the assessee and against the Revenue, answering the referred question in favor of the assessee. The judgment provides clarity on the liability of job workers to pay central excise duty under specific circumstances outlined in the Central Excise Rules, ensuring consistency in the application of the law in similar cases.

This detailed analysis of the judgment highlights the key legal aspects and precedents considered by the High Court in determining the liability of job workers to pay central excise duty, providing a comprehensive understanding of the legal reasoning behind the decision.