2016 (5) TMI 745 - AT - Central Excise

Period of limitation - Job-work basis - Demand of excise duty - carrying out the process of lamination on job work basis on the material supplied by Bus Body Builders - Held that - the period involved in the show cause notice is 1991-92 to March 1995 whereas the show cause notice was issued on 31.7.1996 accordingly entire demand is beyond one year of normal period. On perusal of the records and submissions,it is found that for the purpose of movement of goods from bus body builders to the respondent, manufacture of goods on job work basis , return of goods back to bus body builders and use thereof in the bus body buildings were undertaken in terms of Rule 57F(2) and/or Notification No. 214/86-CE dt. 25.3.1986. In this regard, the bus body builders filed intimation along with undertaking to the Central Excise Authority of job worker. The material was supplied under the cover of Annexure II challan. The said Annexure II challan was pre-authenticated by the Central Excise authorities of the jurisdiction of bus body builders. In the classification list also whereby notification No. 214/86-CE dt. 25.3.1986 was clearly declared. The jurisdictional excise authority of the body builders despite knowing that the bus body building is exempted, pre-authenticated the Annexure II challans. Therefore entire facts related to the bus body builders and the movement of goods and manufactured of goods under job work was very much in the knowledge of Central Excise authorities of both the jurisdiction therefore we do not see any suppression of fact on the part either of bus body builder or of respondent. Therefore the Commissioner has rightly held the demand as time bar. - Decided against the revenue

Issues Involved:
1. Liability for Excise Duty on Job Work Goods
2. Applicability of Notification No. 214/86-CE
3. Time Bar for Demand
4. Suppression of Facts and Collusion
5. Validity of Penalties Imposed on Bus Body Builders

Issue-wise Detailed Analysis:

1. Liability for Excise Duty on Job Work Goods:
The central issue revolves around whether the respondent, engaged in the manufacture of laminated Aluminium Sheets on a job work basis, is liable to pay excise duty. The Revenue argued that the job worker, as the manufacturer, is responsible for the payment of excise duty, even though Notification No. 214/86-CE binds the principal supplier of raw material to discharge excise duty. Since the bus body builders (principal manufacturers) did not discharge excise duty on their final product, the notification was deemed inapplicable, making the respondent liable for excise duty.

2. Applicability of Notification No. 214/86-CE:
Notification No. 214/86-CE allows for the exemption of duty on job work goods if used in the manufacture of a final product on which excise duty is leviable. The bus body builders, however, cleared the goods under exemption, thus not paying the excise duty. The respondent, therefore, was argued to have wrongly availed the exemption, making them liable for excise duty as the manufacturer. The adjudicating authority, however, dropped the demand against the respondent.

3. Time Bar for Demand:
The period involved in the show cause notice was from 1991-92 to March 1995, with the notice issued on 31.7.1996, beyond the normal period of one year. The Commissioner held the demand as time-barred, noting that all relevant facts were known to the Central Excise authorities. The respondent and bus body builders followed the prescribed procedures under Rule 57F(2) and Notification No. 214/86-CE, including filing necessary intimations and undertakings with the Central Excise authorities. The Commissioner concluded there was no suppression of facts, thus the demand was time-barred.

4. Suppression of Facts and Collusion:
The Revenue contended that both the respondent and the bus body builders colluded to evade Central Excise duty, citing letters exchanged between them regarding the movement of goods under certain notifications. However, the Commissioner found no suppression of facts or fraudulent intent, as all procedures and notifications were duly followed and intimated to the Central Excise authorities. The letters advising clients on procedural compliance were deemed not to constitute fraud or misstatement.

5. Validity of Penalties Imposed on Bus Body Builders:
The Commissioner imposed penalties on the bus body builders for not discharging excise duty on their final product. However, the focus of the judgment was on the time-bar issue, and the demand against the respondent was dropped on this ground. The detailed findings indicated that the bus body builders had complied with procedural requirements, and any non-compliance or exemption claims were their responsibility, not the job worker's.

Conclusion:
The Tribunal upheld the Commissioner’s order on the ground of time bar, dismissing the Revenue’s appeal. The detailed findings supported the conclusion that the demand was time-barred due to the lack of suppression of facts and proper procedural compliance by both the respondent and the bus body builders. The merits of the case were not commented upon, as the decision rested on the time-bar issue. The penalties imposed on the bus body builders were not the focus of the final judgment, which primarily addressed the time-barred nature of the demand.

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