2014 (4) TMI 578 - AT - Central Excise

Duty demand - Job Work - whether the main appellant National Conductors could clear finished goods manufactured out of their own raw-materials without payment of duty under job work challans - Held that - appellant had cleared finished goods manufactured out of their own raw material as job work items under job work challans. In my view, the lower authorities were correct in holding that the appellant should discharge the duty liability as the procedure for functioning under the job work is different and clearance of finished goods manufactured in the appellant s factory from his own raw materials is different. It is statutory requirement that the appellant should record all the production that took place in his factory premises out of his own raw-materials in the statutory books of accounts which were not done so, as it is undisputed that the appellant had cleared the finished goods manufactured out of his own raw materials to their clients. In my considered view, record to be maintained by the appellant for the materials received for job working would show the balance of raw-materials while finished to be manufactured were already dispatched. The provisions of job work scheme is totally different, needs to be followed in a manner prescribed which has been not done by the appellant - Decided against assessee.

Summary

Issues:
Violation of Central Excise Act - Duty demand, interest, and penalty imposition on appellant and partner under CEA and CER.
Dispute over clearance of finished goods under job work challans without payment of duty.

Analysis:
The judgment pertains to two appeals challenging an order dated 5.9.2012 regarding the appellant's alleged violation of the Central Excise Act by clearing their own manufactured finished goods under job work challans without paying duty. The appellant received raw materials from their principal manufacturers for job work but cleared their own finished goods. A show cause notice was issued demanding duty, interest, and penalty under CEA and CER. The adjudicating authority confirmed the demand and imposed penalties on the appellant and the partner. The First Appellate Authority upheld the order but reduced the penalty on the individual partner.

The appellant argued that they followed the procedure for job work, received back the processed materials, and paid duty on the finished goods. They contended that there was no evidence of clandestine removal and that the demand for an extended period was unjustified. The appellant cited precedents to support their case. The Department Representative highlighted the admissions made by the partner regarding clearing their own finished goods.

The judge considered the submissions and records, focusing on whether the appellant could clear finished goods from their raw materials under job work challans without paying duty. It was established that the appellant had indeed cleared such goods without fulfilling duty obligations. The judge emphasized the statutory requirement to record all production in the factory premises and maintain proper accounts, which the appellant failed to do. The argument of Revenue neutrality was dismissed as not applicable in this case. The judge differentiated the facts of the cited judgments from the present case, concluding that they were not relevant.

Ultimately, the judge found no merit in the appeal, upholding the impugned order and rejecting the appeals. The judgment was pronounced on 4.4.2014.