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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 ..... ribunal in UMESH RAI VERSUS COMMR. OF C. EX. CUS., VAPI [ 2009 (6) TMI 274 - CESTAT AHMEDABAD] that job-worker is not transformed as independent 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. 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. Thus, 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 manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... HNICAL) AND HON BLE DR SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri JH Motwani, Advocate for the appellant Shri S Hasija, Superintendent (AR) for the respondent ORDER PER: C J MATHEW The present dispute, over the demand of ₹ 27,43,688/- to be recovered from M/s SJS Plastiblends Pvt Ltd, along with penalty of like amount under section 11AC of Central Excise Act, 1944, and penalties imposed on Shri Laxmikant G Joshi, Shri Sadanand Shabde and Shri S P Subhedar, pertains to the alleged mis-declaration of value of intermediate goods manufactured by the appellant-assessee, and cleared by availing the benefit of notification no. 214/86-CE dated 25th March 1986, out of the raw materials supplied by customers. Among the various production activities of the appellant-assessee, we are concerned only with the clearances of ABS/PP sheets / 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is also required to utilize some prime material of their own in the manufacture and, in proportion with the contribution so made, is entitled to claim ownership of some of the products while the rest are required to be returned to the principal-manufacturer as the job-work undertaken by them. It is this artificial segregation that has been characterized by the central excise authorities as falsified production record leading to the detriment fastened on the appellant-assessee by the first appellate authority for having thus evaded duties of central excise. 6. It is apparent from the decisions of the Hon ble Supreme Court in International Auto Ltd v. Commissioner of Central Excise, Bihar [2005 (183) ELT 239 (SC)] and of the Tribunal in Umesh Rai v. Commissioner of Central Excise Customs, Vapi [2009 (244) ELT 138 (Tri.-Ahmd)] and in Suvikram Plastex (P) Ltd v. Commissioner of Central Excise [2008 (225) ELT 282 (Tri.Bang.)] that job-worker is not transformed as independent 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 inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Alumina Hydrate was supplied by the principal manufacturer M/s. HLL which was processed and treated by the respondent with Sulphuric Acid to manufacture Aluminium Sulphate i.e. the final product cleared without payment of duty. Therefore, in our opinion the process of manufacture adopted by the respondent squarely falls within the definition of job work . As such we do not find any infirmity in the impugned order extending benefit of Notification No. 214/86-C.E. to the respondent. 13. Otherwise also even if the benefit of Notification No. 214/86-C.E. was denied to the respondent that excise duty would have been passed on to M/s. HLL who would have availed Cenvat credit on entire duty paid on Aluminium Sulphate cleared by the respondent. Therefore, analyzing from this angle also the entire exercise would have been revenue neutral. 8. In ITEL Industries Ltd v. Asstt. Commissioner of Central Excise [2012 (275) ELT 145 (Ker.)] the Hon ble High Court of Kerala has held that 4. After hearing both sides and after going through the orders impugned, we are unable to accept the contention of the appellant that it has no liability to p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble on MTRs which admittedly were manufactured by them. The department after verifying facts submitted that job workers who manufactured the goods are SSI units which are enjoying duty exemption and further, by virtue of the procedure adopted by the appellant under Rule 57F(2), they had no liability to pay duty because on return of manufactured goods appellant was supposed to pay duty by adjusting duty credit available on inputs. The appellant s contention that after two years they have reversed the duty credit availed on inputs will save them from liability cannot be accepted because appellant s original conduct in availing procedure under Rule 57F(2) is an irreversible procedure whereby the job workers are not liable to account the department for payment of duty on manufacture. We do not find any of the decisions cited by the appellant help them to get out of the liability. The Tribunal rightly held that the MTRs do not constitute an integral part of the telephone, but are accessories on which duty is payable on clearance made by the appellant. Since appellant has availed duty credit on the inputs purchased and transferred to job workers for manufacture, appellant has to necessar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, i.e., rubber bonding in the machine body is purely job work activity. It is undisputed fact that machine bodies are supplied by the principle under Rule 57F(3) of the Central Excise Rules, 1944 and Rule 4(5)(a) of Cenvat Credit Rules, 2004 read with Notification No. 214/86-C.E. The appellant also filed declaration to this effect to the Jurisdictional Asstt Commissioner in compliance of condition of the Notification No. 214/86-C.E. which clearly provides exemption from payment of excise duty on the job work activity subject to condition the principle supplier of raw material discharging the excise duty on their final product wherein job work goods is used. This fact is also not under dispute, in view of declaration filed by the principle supplier of the machine bodies. In the given fact, we are of the view that the job work activity since clearly covered under job work provisions, no duty is required to be paid on the job work activity in terms of Notification No. 214/86-C.E. Accordingly value of machine bodies supplied by the principle manufacturer need not to be added or same should not be levied with excise duty. The issue in the present case is squarely covered by the judgmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als must be allowed. The penalty imposed on the appellant is set aside. However, it is recorded that the appellant is not claiming refund of any duty that had been paid by it pursuant to the demand which is set aside by us. Following the ratio of the above decision and our above detailed discussion, we are of the view that appellant are not required to pay duty on the machine body supplied by the principal manufacturer therefore, the impugned order is not sustainable. Hence the same is set aside and appeals are allowed. 11. It is common ground that the raw material supplied by the customer was to be mixed with the material belonging to the appellant-assessee for manufacture of the products to be cleared to the former. A part of the production, claimed to represent the value of the inputs belonging to the appellant and utilized for production, is retained by the appellant for sale on its own account on payment of full duty. The other portion, admittedly containing also material belonging to the appellant-assessee has been cleared as that of job-work. Thus, the entire quantity of raw material received from the customer has not been utilized for job-w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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