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2020 (6) TMI 752 - CESTAT CHENNAIJob-Work - Exemption to specified items if manufactured in a factory as a job work and used in the manufacture of final products - appellant receive cones from the principal manufacturers and after processing, return the same to them - applicability of N/N. 214/1986-C.E., dated 25-3-1986 or Rule 4(5) of CCR, 2004. Whether the appellant has operated under Notification No. 214/1986-C.E., dated 25-3-1986 as asserted by the assessee or not operated under it, as asserted by the department? - HELD THAT:- There is no scope for discharging Excise duty on the “value addition” component of the goods only under this notification. It is not open for the appellant to pick and chose parts of the notification or modify it to suit their business model - It has been held by the Constitutional Bench of Hon’ble Apex Court in the case of COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI VERSUS M/S. DILIP KUMAR AND COMPANY & ORS. [2018 (7) TMI 1826 - SUPREME COURT] that an exemption notification must be strictly interpreted and the benefit of doubt will go against the assessee. So, there is no scope for the Notification to be read as “exempted from duty except the value addition”, when the notification “exempts from the whole of duty”. From the facts recorded in the impugned orders, it cannot be concluded whether the assessee appellant has operated under the Notification No. 214/1986-C.E., dated 25-3-1986 or otherwise. The assessee appellant also claimed that they have operated under Rule 4(5) of CCR, 2004. It is not clear as to whether this rule was used for some other consignments. If the assessee’s claim is that they have operated both under Notification No. 214/1986-C.E., dated 25-3-1986 and also under Rule 4(5) of CCR, 2004, it is not clear the provision under which they could have done so - The taxable event is the critical factor while determining whether a tax is leviable or otherwise. The taxable event in the case of Excise duty is the manufacture, in case of sales tax, it is the act of selling, in case of Customs it is the act of import or export, in case of Income Tax, it is the act of earning income, etc. There is no tax with “value addition” as the taxable event. There is indeed value addition in the economy at various stages but no Excise duty is leviable on it and Excise duty is leviable only on the manufacture. Measure of Tax - HELD THAT:- The measure of tax in case of Excise duty is determined by Section 4 of the Central Excise Act, Central Excise Valuation Rules, 2000 and the Central Excise Tariff. We find that neither Section 4 nor the Central Excise Valuation Rules have any provision under which Excise duty can be levied on the manufacturer only to the extent of his “value addition” - there are no basis for such a scheme of operation by the assessee appellant. These are fit cases to be remanded to the original authority to verify from records whether the appellant has operated under Notification No. 214/1986-C.E., dated 25-3-1986 or under Rule 4(5)(a) of CCR, 2004 or otherwise. If they claimed the benefit of Notification No. 214/1986-C.E., dated 25-3-1986 and fulfilled all the conditions required therein, there is no question of any Excise duty being leviable upon the appellant. Therefore, any amount paid by them claiming to be Excise duty is definitely not so. Similarly, if they are operated under Rule 4(5)(a) of CCR, 2004, appropriate provisions would apply. If the appellant has not operated under Notification No. 214/1986-C.E., dated 25-3-1986, they are required to pay Excise duty as applicable to any job worker. Appeal allowed by way of remand.
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