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TMI Blog2022 (8) TMI 609X X X X Extracts X X X X X X X X Extracts X X X X ..... in the present case since, the job worker has carried out all the activities which as per the department amounts to manufacture, the job worker is alone to pay the excise duty, therefore, the duty demand raised against the appellant is not sustainable, hence, the same is liable to be set aside. Since, the issue that who is liable to pay the duty has been decided, the issue whether the activity per se is amount to manufacture or otherwise is not decided. The appellant in any case is not liable to pay the excise duty in the facts and circumstances of the present case - Appeal allowed - decided in favor of appellant. - Excise Appeal No.11228 of 2019 With Excise Appeal No.10770 of 2021 - Final Order No. A/10970-10971/2022 - Dated:- 12-8-2022 - MR. RAMESH NAIR, MEMBER (JUDICIAL) AND MR. RAJU, MEMBER (TECHNICAL) Shri Saurabh Dixit, Advocate for the Appellant Shri. Dinesh Prithiani, Assistant Commissioner (AR) for the Respondent ORDER The issue involved in the present case is that whether the activity of unloading of chemicals of Chapter 29 from the tankers and re-packing and labeled in small drums by the job workers is amount to manufacture and liable to Exc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t at the job worker s end is amount to manufacture whether the appellant is liable to pay the duty on such activity. In this regard, we find that there is no dispute that the entire activity of transfer of chemicals from tanker to small drums and labeling thereof was carried out by the job worker of the appellant. In this case, if at all the activity amounts to manufacture the job worker is a manufacturer in the eyes of Central Excise Act, 1944 to hold a person as manufacturer. The ownership of goods is not relevant, therefore, in the present case even though the goods belongs to the appellant but the entire activities were carried out by the job worker. This issue has been considered by the Larger Bench in the case of M/s. Thermax Babcock and Wilcox Ltd. (Supra) wherein, the Larger Bench has observed as under:- 7. The fact that M/s. Thermax Babcock was Principal manufacturer who removed inputs to M/s Thermax (jobworker) for manufacturing of intermediate goods i.e boiler parts which were to be used by the Principal Manufacturer in the manufacture of final product remained undisputed. M/s. Thermax as a jobworker manufactured boiler parts for M/s. Thermax Babcock using the inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f excise. - (1) If the Central Government is satisfied that it is necessary in the public interest so to do, it may, by notification in the Official Gazette exempt generally either absolutely or subject to such conditions (to be fulfilled before or after removal) as may be specified in the notification, excisable goods of any specified description from the whole or any part of the duty of excise leviable thereon : Provided that, unless specifically provided in such notification, no exemption therein shall apply to excisable goods which are produced or manufactured- (i) in a [free trade zone [or a special economic zone]] and brought to any other place in India; or (ii) by a hundred per cent export-oriented undertaking and (ii) [brought to any place in India]. Explanation . In this proviso, [ free trade zone , [ special economic zone ]] and hundred per cent export-oriented undertaking shall have the same meanings as in Explanation 2 to sub-section (1) of section 3. [(1A) For the removal of doubts, it is hereby declared that where an exemption under sub-section (1) in respect of any excisable goods from the whole of the duty of excise leviable ther ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seded under the provisions of this section.] (5) Every notification issued under sub-section (1) or sub-section (2A) shall, unless otherwise provided, come into force on the date of its issue by the Central Government for publication in the Official Gazette.] 7.3 Cenvat Credit Rules, 2000 and 2002 Rules were framed under Section 37 of the Central Excise Act and Finance Act, 1994. That does not vest any power to grant exemption from payment of duty. Thus the applicability of Rule 4 (5) and (6) to grant exemption to the assessee i.e job-worker from payment of duty is inconceivable. 7.4 An exemption to jobworker is provided only in terms Notification No. 214/86 dt. 15.03.1986 issued under Rule 8 (1) of Central Excise Rules, 1944 in terms of Section 5A. The Notification No. 214/86 CE dt. 25.03.1986 which provides exemption to the jobworker from payment of duty on goods received from Principal manufacturer reads as under : Specified goods manufactured in a factory as a job work and used in the manufacture of final products In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd for export; or (ii) to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or supplied to the United Nations or an international organisation for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 108/95-Central Excises, dated the 28th August, 1995; or . (c) removed on payment of duty for home consumption from his factory, or (d) used in the manufacture of goods of the description specified in column (1) of the table hereto annexed by another job worker for further used in any of the manner provided in clause (a), (b) and (c) as above. (ii) the said supplier produces evidence that the said goods have been used or removed in the manner prescribed above ; and (iii) the said supplier undertakes the responsibilities of discharging the liabilities in respect of Central Excise Duty leviable on the final products. Explanation I.For the purposes of this notification, the expression job work means p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at Credit Rules, 2001 and 2002 Rules. Appellants plea was and their contention is that the job-worked goods were exempted from duty on the clearance thereof at the job-worker's end, by virtue of Rule 4(5)(a) of Cenvat Credit Rules, 2001 and 2002 relying upon Rule 4 (6) of the said Rules, appellant claimed that the Principal manufacturer can also remove the goods from the job-worker premises either on payment of duty or for export, under Bond. The Rule 4 (5) (a) and Rule 4 (6) of Cenvat Credit Rules, 2001 and 2002 relied upon by the Appellant in support of their contention read as under : Rule 4(5)(a) - The CENVAT credit on inputs shall be allowed even if any inputs as such or after being partially processed are sent to a job worker for further processing, testing, repairing, re-conditioning or any other purpose, and it is established from the records, challans or memos or any other document produced by the assessee taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave been issued under Cenvat Credit Rules, 2001 and 2002 Rules as the conditions under which cenvat credit can be allowed to a principal manufacturer and it is not a statutory provision to grant exemption from payment of duty to the manufacturer and in the present case, the job worker. 7.6 The jobworker being the manufacturer of goods is liable to pay duty on goods manufactured by him albeit on jobwork. The ownership of the goods is immaterial for the purpose of levy of duty and thus any person who has undertaken the activity of manufacture is liable to pay duty. In order to save the jobworker from payment of duty the Principal manufacture has to own the liability to pay such duty. It is only by virtue of the Notification No.214/86 CE dt. 25.03.1986 that the liability of the jobworker to pay duty is transferred to the Principal manufacturer who undertakes to pay duty. 7.7 The intention of enactment of Notification(supra) was to shift the liability of payment of duty from jobworker to the Principal manufacturer under certain conditions as provided in the said notification. There is no blanket machinery provisions in the central excise law under which the liability to pay d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the Assistant Commissioner of Central Excise may allow in this behalf, for- (i) further use in the manufacture of the final product; or (ii) removing after payment of duty for home consumption; or (iii) removing the same without payment of duty under bond for export. Since the rule provided for exemption where the Principal Manufacturer pays duty on finished goods and therefore it was held that no duty is liable to be paid by the Job worker. The job worker was exempted from payment of duty in case where the goods arising out of job work were to be used by the Principal manufacturer either in the manufacture of goods on which duty was paid by him or were to be cleared as such on payment of duty. The said situation given in Rule(supra) cannot be equated with the present situation as Rule 4 (5) (a) not being concerned with payment of duty but only limited to sending of cenvated inputs to the job worker. 7.10 In the present case the fact remains is that neither the goods after jobwork were cleared as such on payment of duty nor were used in manufacture of dutiable final products by the Principal manufacturer. Hence the duty liability would be on the real m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal is as under : 6. It is thus, obvious that as far as the duty liability of a job worker in terms of Rule 57F(4) of Central Excise Rules, 1944 is concerned, it is settled upto the level of Supreme Court that the job worker was not required to pay duty. We have reproduced above the provisions of Rule 57F(4) of Central Excise Rules, 1944 and the Provisions of Rule 4(5)(a) of the Cenvat Credit Rules, 2004 and have carefully perused the same. The language in both these Rules gives no scope to infer that if the job worker was not required to pay duty in terms of Rule 57F(4) it could be required to pay duty in terms of Rule 4(5)(a) because the conditions of Rule 57F(4) of Central Excise Rules, 1944 were stringent compared to the conditions of Rule 4(5)(a) of the Cenvat Credit Rules inasmuch as Rule 57F(4) categorically required the principal manufacturer to use the goods received from the job worker for further use in the manufacture of the final product or removing after payment of duty for home consumption or removing the same without payment of duty for export while Rule 4(5)(a) does not say so expressly though it is implicit therein. Thus, we are of the view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d upon the judgment of Hon'ble Apex Court in case of M/s International Auto Ltd. Vs. CCE, Bihar - 2005 (183) ELT 293 (SC) . In the said case the dispute related to valuation of goods for the purpose of levy of duty at the Jobworkers end. The controversy was not related to liability of duty of job worker. It is undisputed in the present case that the Principal manufacturer was not paying duty on removal of final products and had also not opted to avail the benefit of Notification No.214/86-CE Hence the liability of is on the manufacturer of intermediate product, i.e. job worker in the present case. 7.15 The reliance placed upon the Circular No.306/22/97/ - CX dt. 20.03.1997 is also misplaced since the circular was with reference to the situation upon eligibility of the jobworker to claim credit where no duty was paid by them. However the facts of the present case are different as it deals with the situation as to who should be liable to pay duty when the Principal manufacture is not discharging duty either on jobwork goods or on final products in which such jobwork goods are consumed. In such case the responsibility lies the Jobworker who is the ultimate manufacturer of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eviable on the finished products. We find that no evidence has been brought on record by the Appellants to prove that the supplier of the raw-material had supplied the materials to them under the provisions of Notification No. 214/86. In view of absence of any material to this effect, it is not open to the Appellants to claim that they were working under the provisions of Notification No. 214/86. The copies of challans brought on record by the Appellants only refer to the movement of excisable goods under rule 57F(2). In view of this, the reliance placed by the Appellants on the observation of the Tribunal in respect of Notification 214/86 in the remand order is not tenable. We also observe that the Tribunal directed the Adjudicating Authority to decide the matter in the light of the observations and also according to the law. Notification No. 214/86 nowhere provides that the supplier of the raw material will be liable to pay the duty on the goods manufactured as a job work. Para 2 of the Notification No. 214/86 speaks of the liability of the supplier for discharging the duty leviable on the finished products and not on the goods manufactured on job work basis. The Adjudicating aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 214/86 CE supra, the jobworker as a manufacturer is liable to duty on the job worked goods. 8. As per above discussion, we hold that the Jobworker M/s Thermax being manufacturer of excisable goods is liable to pay duty on the intermediate goods manufactured by him on jobwork basis which supplied to their principal M/s Thermax Babcock. The question referred to this larger bench is answered accordingly. Registry is directed to place the appeals before the referral bench for appropriate orders. From the above detailed finding of the Larger Bench, it is settled that irrespective of the ownership of goods whoever undertakes the manufacturing activity he has to pay the duty. Applying the ratio of the Larger Bench in the present case since, the job worker has carried out all the activities which as per the department amounts to manufacture, the job worker is alone to pay the excise duty, therefore, the duty demand raised against the appellant is not sustainable, hence, the same is liable to be set aside. Since, the issue that who is liable to pay the duty has been decided by us as above, we are not going into the issue whether the activity per se is amount to manufacture or othe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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