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TMI Blog2019 (9) TMI 275X X X X Extracts X X X X X X X X Extracts X X X X ..... heets / HIPS sheets as job-worker of M/s UKAY Metals Industries Pvt Ltd, M/s Merloni Thermosanitary India Ltd and M/s Toshira Auto Industries, Nasik. Admittedly, some part of the production from the same 'input mix' were also cleared to these customers after payment of duty on different assessable value. 2. As far as the disputed clearances are concerned, as well as those with which these were compared, the appellant-assessee claimed to be in receipt of grindings/scrap from customers which were required to be mixed with prime material belonging to the appellant herein and, as per pre-assigned proportion, a portion of the sheets so manufactured was cleared as return after job-work to the supplier while the rest were cleared as normal manufacture of their own. The notification invoked for the former exempts job-workers from duty liability arising from such job-work subject to the usage of supplied inputs in the manufacture of finished products and on the supplier of the inputs undertaking to discharge duty liability. It is not in dispute that the products emanating from the factories of the appellant are intermediate goods for use in the manufacture of final products by customers or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ependent manufacturer merely because of their own material being deployed. Therefore, it is well within the scheme of job-work for the appellant-assessee to be entitled to the benefit of exemption intended for job-workers subject to fulfilment of the conditions prescribed therein. 7. As the said exemption is available to job-workers, it naturally follows that the consequences should necessarily be available to the appellant-assessee if the conditions therein are complied with. The ordinary scheme of levy of duties of excise does not brook any distinction among manufacturers. However, to accommodate the commercial reality of outsourcing, job-workers are segregated for appropriate exemption from payment of duties and in the rules pertaining to availment of credit of duties/taxes paid on input goods/input service. Various decisions have examined this distinction between manufacturers as job-worker and as producer on own account. The Tribunal in Commissioner of Central Excise, Jaipur - II v. Ranjan Polyesters Ltd [2016 (344) ELT 257 (Tri.-Del.)], relying upon circular no. 306/22/97-CX dated 20th March 1997 of Central Board of Excise and Customs, held the duty liability is transferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er going through the orders impugned, we are unable to accept the contention of the appellant that it has no liability to pay duty by virtue of the reversal of credit taken on inputs purchased and transferred to job workers for manufacture and return of MTRs. This is because the appellant by adopting the procedure prescribed under Rule 57F declared itself as the principal manufacturer and took duty credit on inputs and components purchased and transferred to job workers who manufactured MTRs on collection of labour charges and returned the same to the appellant. Admittedly appellant marketed the products manufactured by engaging job workers and by virtue of the procedure prescribed under Rule 57F adopted by the appellant, appellant cannot turn back and say that duty is payable by the actual manufacturer which is the job worker. The appellant admittedly availed duty credit on the inputs and components purchased which are transferred to the job workers for manufacture and return of MTRs. Rule 57A clearly states as follows : "Rule 57A. Applicability :- (1) The provisions of this section shall apply to such finished excisable goods (hereinafter referred to as the "final products"), a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he inputs purchased and transferred to job workers for manufacture, appellant has to necessarily pay duty on the MTRs sold and adjust duty credit availed on the components by following Rule 57A extracted above. However, we make it clear that since the duty liability on the appellant is upheld, appellant is entitled to adjust duty credit availed on components and the reversals made by the appellant could again be reversed to enable it to set off duty credit availed on components purchased against duty payable on the final product namely, MTR. Appeal challenging the demand of duty is dismissed.' 9. It would, therefore, appear that the provisions of exemption notifications, as interpreted in the decisions, accord the privileges of job-worker to a manufacturer if the supplier of inputs undertakes to discharge the duty liability on the finished goods so manufactured with the job-worker as the default manufacturer even for a contracted manufacturer. The facts of the present case would need to be tested against this meaning of job-worker. We discern a patent lack of such examination in the impugned order. 10. The next issue is concerned with the ascertainment of value to be adopted for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... present case is squarely covered by the judgment in case of International Auto Ltd. (supra), wherein Hon'ble Supreme Court has held as under : 6. We are of the view that the submission of the appellant is correct. The Tribunal appears to have been confused between the manufacture of the final product, namely, excavators and the manufacture of the intermediate product, namely, the floor plate assemblies. The scheme of Modvat permits the person who clears the ultimate final product to take the benefit of the Modvat scheme at the time of clearance of such final product. The manufacturer of the final product, in this case TELCO, would therefore, be entitled not only to adjust the credit on the inputs supplied by it to the intermediate purchaser such as the appellant but also to the credit for the duty paid by the intermediate purchaser on its products. The reliance on the decision in Burn Standard Company Ltd. (supra), by the Tribunal was misplaced. That case has no doubt held that the value of the free inputs were to be included in the final product. In that case, the final product was wagons and the question was whether the items which were supplied free by the Railway Board to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct cleared to the supplier. However, duty liability has been discharged in full on goods in which supplied raw material was appropriated by the appellant-assessee for production on own account. Therefore, no differential duty arises therefrom. Unutilised raw material, even if liable to duty, that are in compliance with the provisions relating to the utilization for job-work is also not stigmatized as having been cleared without payment of any duty. The sole issue for consideration is whether the appropriate duties have been discharged on the goods cleared by the appellant-assessee as job-worker. It is admitted in the records that the labour charges and the margin of profit have been subject to duties. The customers have utilized the job-work goods as inputs for manufacture of final products and there is no allegation of non-inclusion of the costs in the assessable value on which duty liability has been discharged. In these circumstances, the presumption of the goods remaining unutilized merely because of artificial segregation based on the input contribution of the supplier and the appellant-assessee may not be sustainable. This is an aspect that has not been examined in the order ..... X X X X Extracts X X X X X X X X Extracts X X X X
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