2015 (11) TMI 458 - AT - Central Excise

Job work - Valuation - whether the value of the jobwork undertaken by the appellant for Swojas is liable to be included in the value of clearances made by the appellant and deny him the benefit of Notification No.1/93 holding appellant as manufacturer - Held that - appellant is manufacturer of various dairy equipments and claims benefit of small scale exemption No. 1/93 and also undertakes jobwork. It is seen from the records and more specifically the undertaking given by the Swojas to the jurisdictional authorities having jurisdiction over their office that they wished to get the dairy equipments manufactured on jobwork basis from the appellant herein. We specifically find that the said Swojas has informed and requested the Asst. Collector to forward one of the undertakings to the jurisdictional authorities of the appellant s factory. Further we find that they had given a clear undertaking that any duty liability that arises on the dairy equipments manufactured as job work by the appellant, will be discharged by Swojas. On such categorical declaration and undertaking given by Swojas no demand is raised on Swojas. We find that the provisions of Notification No.84/94 are clear when read indicates that if any duty liability that arises on the goods manufactured on job work basis under the said Notification, is to be demanded from the supplier of the raw material. In the case in hand, the supplier of the raw material is Swojas and the demand of duty if any, should have been made on them and not on the appellant. The provisions of the said Notification are very clear to that extent and Revenue authorities were in error in demanding the Central Excise duty from the appellant. - impugned order is set aside - decided in favour of assessee,

Summary

Issues:
- Appeal against order-in-appeal No. PII/BKS/521/2004 dated 19.11.2004.
- Whether value of jobwork undertaken by appellant for another party should be included in value of clearances.
- Applicability of Notification No. 1/93 for small scale exemption.
- Compliance with Notification 83/94 and 84/94 for jobwork procedures.
- Liability of duty payment on goods manufactured through jobwork.
- Interpretation of Notification No. 84/94 in demanding Central Excise duty.

Analysis:
The appeal in question was directed against the order-in-appeal No. PII/BKS/521/2004 dated 19.11.2004. Despite the absence of the appellant during earlier proceedings, the Bench proceeded with the appeal upon confirmation that the appellant had been served notice for the hearing. The case involved the manufacturing of dairy equipment by the appellant, who was also undertaking jobwork for another entity. An investigation revealed that the value of clearances made for the other party was not included, affecting the exemption claim under a specific Notification. The duty liability, interest, and penalties were imposed by the adjudicating authority, which was partially modified by the first appellate authority. Notably, the Revenue did not appeal against the penalties set aside by the first appellate authority.

The main contention revolved around the jobwork undertaken by the appellant for the other party, supported by an undertaking filed under a relevant Notification. The Revenue argued non-compliance with necessary procedures, leading to the demand confirmed by lower authorities. However, upon reviewing the records and the undertaking provided by the other party, it was evident that any duty liability arising from the jobwork would be discharged by them, not the appellant. The provisions of the Notification were clear in attributing duty liability to the supplier of raw material, in this case, the other party, Swojas. Therefore, the demand for Central Excise duty from the appellant was deemed erroneous.

In conclusion, the Tribunal found the impugned order unsustainable and set it aside, allowing the appeal in favor of the appellant. The interpretation of the Notification regarding duty liability on jobwork and the clear undertaking by the other party played a crucial role in determining the outcome of the case.