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TMI Blog2023 (5) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... ew article having a distinctive character or use has emerged from the said process. The marble slabs manufactured by the respondent falling under chapter heading 2515 are new article having a distinctive character or use and marketable, therefore eligible to levy of excise duty. A Manufacturer is the one who actually undertakes the manufacturing activity. A customer does not become manufacturer by merely supplying raw materials or getting goods manufactured according to his drawing or specification. Once the goods have been manufactured, duty liability arises and fastened on the manufacturer of the said goods as Central Excise duty is on manufacture . From the facts on record, it is found that the respondent assessees have done the job work of sawing the green marble blocks and cleared the same as such (without finishing, polishing etc.) to the principal manufacturers. It is the principal manufacturers who also have established units for processing of marble who have done the further process of finishing, polishing etc. and thereafter cleared the goods from their premises - though the respondent assessees is liable to pay excise duty on the job work goods, it is found that s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... locks) iii) To recalculate the SSI exemption from the turnover after taking into account the exempt and export turnover. iv) The penalty amount under Section 11AC shall also be modified accordingly. v) The respondent assessees shall be entitled to pay the reduced amount of penalty, upon such redetermination, in accordance with law. vi) We also direct the respondent assessees to appear before the Adjudicating Authority with a copy of this order and seek opportunity of hearing within a period of 45 days from the date of receipt of this order. - Excise Cross Application No. 50947 of 2019 in Excise Appeal No. 52070 of 2019 with Excise Cross Application No. 50948-50949 of 2019 (DB) in Excise Appeal No. 52091-52092 of 2019 - FINAL ORDER No. 50675-50677/2023 - Dated:- 18-5-2023 - MR. ANIL CHOUDHARY, MEMBER (JUDICIAL) AND MS. HEMAMBIKA R. PRIYA, MEMBER (TECHNICAL) Mr. O.P. Bisht , Authorised Representative for the Appellant Mr. Bipin Garg, with Ms. J. Kainaat, Advocates for the Respondent ORDER As the facts and circumstances are similar, we take the appeals together and deal with the facts of Appeal No. 52092 of 2019 of M/s Sonex Marble. The present ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 400 lakhs in financial year 2013-14, the small-scale exemption in terms of Notification No.08/2003-CE dated 01.03.2003 was not available to them from Financial year 2014 -15 onwards and duty was payable from first clearance. 1.6. Against the above background, Show Cause Notice dated 06.08.2018 was issued to the assessees demanding Central Excise duty amounting to Rs.1,80,11,679/-(for the period 2012 to 2015-16) along with interest and penalty under Section 11A (4) Section 11AB and Section11AC of the Central Excise Act, 1944. 2. The Show Cause Notice was adjudicated on contest by Additional Commissioner vide 34/CE/UDR/2018-19-Jt.Commr. dated 28.02.2019 whereby, the central excise duty liability calculated on the total quantity of Marble slab cleared in square meters for Rs. 1,66,07,824/- (CENVAT Rs. 1,63,33,603/-; Education Cess Rs. 1,82,814/-; and Secondary Higher Education Cess Rs. 91,407/-) for the period 2012-13 to 2015 16 was confirmed along with interest and equal penalty was imposed. Demand amount of Rs. Rs. 14,03,945 calculated in excess in Show Cause Notice was dropped. The demand was confirmed on following grounds that: - i) The principal manufacturers who ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appellant in that financial year. vi) Accordingly, the value of goods manufactured on job work basis worked out for the financial years from 2012-13 to 2015-16 respectively and same added to the value of goods sold by the appellant for determining total value of clearances for the purpose of ascertaining eligibility of the Notification No. 08/2003-CE dated 01.03.2003. (SSI exemption) vii) The method adopted for the calculation of duty in the Show cause Notice was held correct except calculation error resulting excess demand of duty amounting to Rs.14,03,945/- which was dropped. (emphasis supplied) 3. The assessees filed an appeals before the Commissioner(Appeals) against the order dated 28.02.2019 of the adjudicating authority, which was allowed by the Commissioner (A) vide Order-in-Appeal No. 450- 451(CRM)CE/JDR/2019 dated 09.05.2019 on following grounds: - (a) impugned order being non-speaking is violative of principles of natural justice. (b) they are entitled to avail exemption under Notification No.83/94-CE on marble slabs cleared after job work. (c) the wrong method has been applied for valuation of job worked slabs. (d) the adjudicating authority h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er job work and they have sold the goods on payment of Central Excise Duty. (l) Appellant assessees also led evidence that the value of job work (including cost of blocks done by them was about Rs. 20 per square feet and the sale price of the principal manufacturer was further higher by Rs. 7 to Rs. 10, due to further value addition by way of filling cracks, edge cutting, polishing, buffing, edging, etc. (m) The appellant also disputed the quantum of slabs, (calculated by Revenue) of marble manufactured from the marble blocks. (n) Chapter note to Chapter 25 of Central Excise Tariff provides that one cubic meter of marble block is deemed to generate 30 square meters of marble slabs . Thus, calculation of more quantity of slabs by revenue is erroneous. (o) As the marble blocks are of irregular shape (that is not of perfect rectangular shape) the marble slabs produced after cutting were also of irregular shape. The invoices of principal manufacturers considered for valuation by revenue are mostly of finished marble slabs that is after edge cutting, crack filling, epoxy polishing, buffing, etc. (p) The court below have erred in adopting separate formula for quantum of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red from rough irregular marble slabs, received after job work, and (v) no information regarding turnover of manufactured goods was obtained. It was also held that Rule 4(5) (a) of CCR is not relevant, as in the facts of this case, the principal manufacturers are not registered, being SSI Units working under SSI Exemption Notification No. 08/2003-CE. Revenue have not denied the fact that the principal manufacturers (except two) were not eligible for SSI exemption. Further held that the benefit of exemption Notification 84/94-CE available to a job worker cannot be denied on technical reasons, and duty is payable by the principal manufacturer, on crossing the SSI exemption limit. The Commissioner (Appeals) relying on the ruling in Commissioner vs. Bharat Electricals 2001-127-ELT-468 (Tri.- Delhi) held that-as no exemption from payment of duty was availed in respect of raw material or marble blocks, benefit of Notification No. 84/94-CE is available to the job worker. 6. The Commissioner (Appeals) also observed that the valuation done by revenue under Rule 10A is contrary to the said rule. As per the facts on record, respondent assessees have cleared white marble slabs (own manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the goods exported are exempt from payment of duty under Rule 19 of CER, 2002, which authorizes to export excisable goods without payment of duty. Further marble slurry is a waste product and is Nil rated in the CETA under CTH 25309099. Marble blocks are also Nil rated in CETA under CTH 25151210. Further held that exports through merchant exporter supported by VAT 15/H form is not required to be considered for SSI Exemption. Relying on the ruling in CCE vs Udaipur Surgicals 2011(264)ELT 145 and also in CCE vs. Universal Packaging 2013 (292)ELT.191 (Bombay). He also observed that the duty have been wrongly calculated, as effective duty cannot exceed the duty prescribed under CETA. 10. It was further observed that the Adjudicating Authority has erred in not giving the benefit of tariff rate of duty on marble slabs or @ Rs. 30/60 per square meter (whichever is lower). The Adjudicating Authority failed to consider the legal position of law that effective duty in no case can exceed the duty calculated from tariff rate. Referring to Notification No. 12/2012-CE dated 17.03.2012 which prescribes duty on marble slabs @ Rs. 30/60 per square meter, reveals that exemption have been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .L.T. 665 (Tribunal) and COMMISSIONER OF C. EX., GOA VS COSME FARMA LABORATORIES LTD. [2015 (318) E.LT. 545 (S.C.)]. 12.3 The law does not differentiate whether the incidence of manufacture is by way of job work or on account of the assessees undertaking such activity or in any other situation Section 5A of the Central Excise Act, 1944 grants power to the Central Government to 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. The fact that the notification granting exemption to goods manufactured by a person on job work basis is issued under the provisions of the said section 5A which give emphasis to the stand that the goods manufactured on job work basis are chargeable to duty of excise. 12.4 Whether the Commissioner (Appeals) has corrected relied upon the declaration filed by the principal manufacturers without any verification or authentication which are against the provisions of law r/w relevant Notification No. 83/94-CE, 84/94-CE-214/86-CE. 12.5 Further urged t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lant on job work basis was required to be worked out in terms of Rule 10A(ii) of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, on the basis of sales price prevalent at the principal manufacturer's premises on the date when such slabs were cleared by the Appellant. 14.3 In support of his contention, he placed reliance upon the following decisions: i) CCE Vs Hari Chand Shrigopal 2010(260) ELT-3(SC)]. ii) Union of India Vs Ganesh Metal Processors Industries. [2003(151) ELT.21(S.C) iii) Comm. of Cus (Import), Mumbai VsDilip Kumar and Comp [2018(361) E.L.T. 577(S.C.)]; 15. On behalf of the Assessees, Shri Bipin Garg, learned advocate appeared and supported the findings of the appellate authority. He further stated that the Assessees was a job worker who was working below the exemption limit, so they were not required to pay the duty. Hence, job work goods were not liable for duty. The principal manufacturers are duty bound to follow or comply with the Notification, thus liability is on them to pay duty, not on job worker. All the principal manufacturers were working under Small Scale Exemption Notification No. 08/2003-Ce dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been manufactured, duty liability arises and fastened on the manufacturer of the said goods as Central Excise duty is on manufacture . 17.2 It is common in this industry to supply raw material to a job worker or processor and get the goods manufactured from him in his factory. In such cases, raw material supplier will not be treated as 'manufacturer' even if the raw material is supplied by them and right of rejection is retained by them. As per law, the excise duty is on manufacturing and therefore the duty liability arises only when the goods are manufactured during the job work. Some of the relevant decisions in this regards are as follows: i) FUSION POLYMERS LTD. Vs COLLECTOR OF CENTRAL EXCISE [1991 (56) E.L.T. 665 (Tri.), it was held that job worker being independent units are the manufacturers. ii) COMMISSIONER OF C. EX., GOA VS COSME FARMA LABORATORIES LTD. [2015 (318) E.LT. 545 (S.C.)], it was held that job workers were liable to pay duty as they were carrying out manufacturing activity independently. iii) Ujagar Prints v. UOI - 1989 (39) ELT 493 (SC) (5-Member Constitution Bench), it was held that excise duty is on 'manufacture and production of go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edural lapse. We are of the opinion that this is a substantial condition which cannot be taken as a procedural condition, as it shifts the duty liability from the job worker to the supplier of raw materials or semi-finished goods. Until and unless this condition of giving undertaking is fulfilled, the duty cannot be fastened on the supplier of raw materials or semi-finished goods, as they were not the manufacturers of marble slabs/tiles. We note there are several case laws that have held that the condition of the exemption notification has to be construed strictly and if any condition is not fulfilled the same cannot be applied to a situation. 20. In view of our aforementioned observations and findings, we allow the appeals of revenue by way of remand to the original Adjudicating Authority with the following directions: i) To calculate the quantum of marble slabs cleared on job work basis as per the formula prescribed in the tariff. ii) To calculate the duty on the job work by taking value of job work goods (including cost of marble blocks) iii) To recalculate the SSI exemption from the turnover after taking into account the exempt and export turnover. iv) The penalt ..... 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