2016 (6) TMI 272 - AT - Central Excise

Demand of duty from the Job worker who is the actual manufacturer - Extended period of limitation - suppression of facts - Held that - Principal Manufacturer (s) have not been issued any SCN by the Revenue and the job worker, who is the appellant assessee, has only been issued the SCN (Show-Cause Notice). The job worker, who is the appellant assessee has been treated by the Revenue as the manufacturer by the Central Excise Authorities, with whom the Principal Manufacturer (s) filed the declaration under Notification 214/86-CE saying that they undertake to discharge liability of Central Excise duty, if applicable. It is, therefore, not a question of hiding any facts from the Revenue authority. Therefore, when there is not any suppression of facts by the appellant, any demand of Central Excise duty can be made for normal period of one year only. In other words, liability of payment of duty would be for the preceding one year from the date of SCN, i.e. 07.10.2008 ; Central Excise duty liability will be for the clearances made by the appellant assessee for the said period of preceding one year. The appellant has already been given the benefit of refund of service tax paid by the lower adjudicating authority, which can be adjusted against their liability of payment of Central Excise duty for the one year period being confirmed by this order. We also take note that the appellant made a predeposit of ₹ 15.00 lakhs, which can also be adjusted against their liability of payment of duty of Central Excise being confirmed here. As confirming the demand for the normal period of one year. It is also obvious that the appellant would be liable to pay applicable interest on the Central Excise duty from the day it became due till the payment of the same. Original adjudicating authority is hereby directed to compute the liability of duty of Central Excise and the interest of the appellant in terms of this order and inform the appellant within three months of receipt of this order. As no kind of concealment of the facts on the part of the appellant and all along Revenue was in full knowledge of the facts and even the Audit team of the Department visited the appellant s premises and advised them to pay service tax instead of Central Excise duty and the appellant had paid the said service tax then. Consequently, there is no justification for imposition of any penalty on the appellant under the law of Central Excise. The Penalty imposed on the appellant is, therefore, hereby set aside.

Summary

Issues:
Fixing responsibility for payment of duty of central excise where conditions of job work under Notification No. 214/86-CE have not been fulfilled.

Analysis:
The judgment concerns the responsibility for payment of central excise duty when conditions of job work under Notification No. 214/86-CE have not been met. The appellant, a job worker, was issued a Show-Cause Notice (SCN) treating them as a manufacturer for duty payment on job work done for Principal Manufacturers (PMs). The appellant contended they were only job workers for the PMs and availed exemption under the notification due to the PMs being in an exempted zone. The Revenue argued that as per the notification, the responsibility to pay duty lies with the job worker if the PMs fail to do so.

The Tribunal considered two periods involving different PMs where duty was not paid on goods cleared through job work. It noted that the PMs had not been issued any SCN, only the appellant. The Tribunal found that the appellant had not suppressed any facts, limiting the duty liability to one year preceding the SCN date. The appellant was granted the benefit of refund of service tax paid, which could be adjusted against the duty liability. The Tribunal directed the original adjudicating authority to compute the duty liability and interest for the one-year period.

While acknowledging the decision in Adarsh Udyog, the Tribunal differentiated the present case by confirming the demand for the normal one-year period only. The appellant was held liable for applicable interest on the duty. Notably, no penalty was justified as there was no concealment of facts, and the appellant had promptly paid service tax when advised by the Audit team. Thus, the penalty imposed on the appellant was set aside, and the appeal was decided accordingly.