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TMI Blog2009 (9) TMI 849X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in their declaration and which included the following :- 1. Other cast Articles of Iron Steel Ch. 7325 2. Converters, Ladies, Ingot Moulds Casting machines Ch. 8454 3. Metal Rolling Mills Rolls thereof Ch. 8455 4. Iron Non-Alloy Steel in Ingot or other primary from (excluding iron of heading 7203) Ch. 7206 5. Stainless Steel in Ingots Ch. 7218 6. Other Alloy Steel in Ingots Ch. 7224 7. Other Bars Rods Ch. 7214 8. Other Bars Rods of Stainless Steel Ch. 7222 9. Other Bars Rods of other Alloy Ch. 7228 10. Flat-Rolled Products of Iron or Non-alloy Steels Ch. 7208 Ch. 7210 Ch. 7211 Ch. 7212 11. Flat-Rolled Products of Stainless Steel Ch. 7219 Ch. 7220 12. Flat-Rolled Products of Other Alloy Steel Ch. 7225 Ch. 7226 The option as above was submitted by the appellants under their letter dated 2-11-2996 to the jurisdictional Superintendent, Central Excise, Range-II, Kashipur. 3. The said Super ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise duty. The appellants Sh. Yogesh Kumar Jindal and Sh. Arpan Jindal was also subjected to penalty of Rs. 25 lakhs each whereas Shri Devendra Kumar Agarwal and Shri Atul Kumar Agarwal was subjected to the penalty of Rs. 10 lakhs each. Hence, these appeals. 6. It is the case of the appellants that the goods in question i.e. bars and rods have been manufactured by KVS on job work basis out of ingots supplied by KE and conversion charges have been duly paid by KE to KVS and same is not disputed by the Department. The appellants KE are not the manufacturer of bars and rods and this fact is apparent from the show cause notice itself as it is undisputed fact that the appellants KE do not have facility for manufacture of bars and rods in their factory and in such a situation when there cannot be manufacturing activity undertaken by KE in relation to bars and rods, the question of claiming duty from them on such product cannot arise. It is further case of the appellants that mere mention of bars and rods as one of their final product in their declaration while claiming area based exemption under the notification cannot be a ground to deny the benefit of the said notification ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to KVS, the activity of manufacture of rods and bars by converting ingots into final product though could be subjected to duty, the same would be payable by the manufacturer thereof and in the case in the hands, it is the job worker who is the manufacturer of the same on job work basis and therefore, it could not be demanded from the supplier of the raw materials i.e. KE. In the case in hand, according to learned Advocate, the appellants KVS is liable to discharge of the duty liability, if any. However, since KVS is also entitled to enjoy the benefit of the Notification No. 50/2003-C.E., the said appellants are also not liable to pay duty on manufacture of such product. While assailing the finding by the adjudicating authority that the commercial production had not commenced by the appellants in respect of bars and rods that, therefore, are not entitled to claim the benefit of Notification No. 50/2003-C.E., learned Advocate submitted that the same is not in consonance with the provisions of the notification inasmuch as that the appellants are manufacturing other finished products which are entitled to avail the exemption under the said notification and, therefore, merely because t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xemption under Notification No. 50/2003-C.E., dated 10-6-2003 in relation to such product. 10. It was also sought to be contended on behalf of the respondent that since the raw materials were supplied by the appellants KE to the appellants KVS and the same, after being subjected to necessary manufacturing process, were returned to the appellants KE by the appellants KVS, the former i.e. appellants KE would be principal manufacture of the product in question, and, therefore, would be liable to pay the duty. It was also submitted that Rule 4 of the Central Excise Rules 2002 is not that exhaustive and the duty liability will have to be fixed by taking into consideration of various other provisions relevant for the same. Referring to the agreement between the parties, it was also sought to be contended that the same does not disclose principal to principal relationship between the parties. 11. Perusal of the impugned order discloses that the adjudicating authority after recording the rival contentions in the matter has summarized the dispute for consideration as under :- 27. The issue in brief may be summarized as M/s. Kashi Enterprises, B-25-29, Industrial Estate, Bazpur Road, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee with the Department s averment that M/s. Kashi Enterprises have not obtained permission of job work as per Rules and procedures under Central Excise Acts and Rules and therefore they have otherwise violated the provisions of Rules and procedures under Central Excise Acts and Rules made thereunder, besides violating the explicit provisions of the Notification No. 50/03-C.E., dated 10-6-2003 issued under Section 5A of the Central Excise Act, 1944 in as much as they had cleared bars and rods without payment of duty, even though they were not manufacturing them and had not commenced their commercial production and accordingly contravention of the provisions of Rules 4, 6 8 of the Central Excise Rules, 2002 i.e. their failure to discharge the duty liability, failure to properly assess and pay the duty on the due date is established against them. 30. As regards the defence taken by M/s. Kashi Enterprises that in their case the duty liability in respect of bars and rods manufactured on job work basis lies on Kashi Vishwanath Steels Ltd., in view of various judicial verdicts cited by them for the reason that the process of conversion of ingots into bars and rods amounts to manufactu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade payment of duty deliberately and intentionally . 13. As noted above, the dispute in the matter in hand essentially relates to the identity of the manufacturer of the product bars and rods. Is it KE or KVS? Perusal of above quoted three paras from the impugned order, whereby the adjudicating authority has sought to dispose of the matter, nowhere discloses the required analysis of the materials on record to find out appropriate answer to the point in issue. Apart from saying that the adjudicating authority fully agrees with the Department s averments that M/s. KE have not obtained permission for job work as per the rules and procedure under the Central Excise Act and Rules and, therefore, they have otherwise violated the provisions of rules and procedure including the notification in question while clearing the bars and rods, the adjudicating authority has not analysed any material on record nor has arrived at a clear finding about the identity of the manufacturer of the bars and rods before fixing the duty liability upon the appellants KE. It is pertinent to note that the appellants had specifically pleaded that they have entered into an agreement between the parties in relati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Apex Court had observed that- On the admitted facts which we will set out immediately the respondents cannot be considered as manufacturers of agarbatti, amlapodi and dhup etc. manufactured in the premises of house-hold ladies as described above without the aid of power. The undisputed facts are that the respondents supplied raw materials for rolling incense sticks etc. to outside manufacturers and paid wages to them on the basis of number of pieces manufactured. Such manufacture was without the aid of power. There was no supervision over the manufacture. Incense sticks were put in packets and such packets were sold from the premises of the house-hold ladies and they did not go to the factory premises of the respondents. No doubt the proceeds went to the respondents but that will not change the character of manufacture. If the conclusion is that the house-hold ladies were the real manufacturers then the decision of the Tribunal cannot be faulted. CEGAT after considering the materials before it concluded that the respondents are not the manufacturers of agarbati, amlapodi, dhup etc. manufactured by various cottage type manufacturers on job work basis. On the facts narrated abov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The adjudicating authority in the case in hand however has totally forgotten all those aspects while disposing the matter. Being so, the appellants are justified in making grievances in relation to the impugned order fixing liability to pay the duty upon them without analyzing the materials on records and without arriving at an appropriate conclusion based on proper and logical reasoning. On this ground itself without referring to all other grounds sought to be canvassed in the matter, the impugned order is liable to be set aside and matter remanded to the adjudicating authority to decide the same afresh in accordance with the provisions of law. 18. In the result, therefore, the appeals succeed, the impugned order is set aside and matter is remanded for fresh consideration thereof by the adjudicating authority and bearing in mind the observations made herein above. We make it clear that we have not expressed any opinion on the merits of the case. The adjudicating authority to dispose of the matter as expeditiously as possible after hearing both the parties and in any case prior to 31st March, 2010. 19. All the appeals are disposed of in the above terms. - - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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