TMI Blog2023 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... rs. In the case of KARTAR ROLLING MILLS VERSUS COMMISSIONER OF C. EX., NEW DELHI [ 2006 (3) TMI 63 - SUPREME COURT] , the benefit of exemption from duty to the job worker was denied essentially as no undertaking was filed by the principal. It is common knowledge that the responsibility in the central excise statute is on the manufacturer for payment of duty on the manufacture of finished goods which could either be a principal manufacturer or the job worker and in the event of finished goods produced by the job worker in the normal course the said job worker would be deemed to be the manufacturer. Also for entitlement of the availment of exemption notification, it is imperative that notification conditions are strictly complied with. The requirement of filing the declaration undertaking for availment of said exemption notification cannot be considered as mere procedural. In the event of non submission of such undertaking, ipso facto the said job workers of the respondent assessee automatically are the manufacturer of SS circles/ scrap so cleared by them and sent to the respondent assessee though, later cleared by them under the cover of their own invoices. Other appeals file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed for manufacture. Respondents accordingly, were not availing the cenvat credit on the goods so used in the manufacture and input services utilized thereto, during the period October 2014 to 30.06.2017 as provided under Rule 15 ibid. 2.1 It is the case of the Department that during the aforestated period the respondents cleared stainless steel circles falling under chapter heading 7222 40 20 of the First Schedule of the Central Excise Tariff Act, 1985, without payment of central excise duty of Rs.1,87,98,590/- and stainless steel scrap generated during the manufacture of stainless steel circles falling under chapter sub heading 7204 2190 without payment of central excise duty of Rs.21,86,753/-. It is the revenue s case that during the course of audit of the assessee s unit, it was observed that the assessee was engaged in the manufacture of SS Patta/ Patti (falling under Tariff Heading No.7219 90 90) through cold rolled process and was paying central excise duty under compounded levy scheme as stated supra on per machine basis. During the course of audit and the examination of records, it was noticed by the department that the assessee was also clearing S.S. Circles and scrap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CE dated 25.03.1986. Declaration as may be applicable for removal of goods for job work under Rule 16A of the Central Excise Rules, 2002 [The Rules] was also not filed by the assessee-respondents. The Department, however had therefore, alleged suppression and mis-declaration on part of the respondent and had thereby invoked extended period of limitation. 4. Contrary to above, the respondent-assessee claims to be the manufacturers of stainless steel circles and stainless steel scrap under Compounded levy scheme though they were getting conversion of stainless steel Patties or Pattas into stainless steel circles on job work basis under cover of job challans. 5. Having heard the rival contentions and after perusing the relied upon case laws drawn for support by both the sides in support of their contentions we proceed to analyze and discuss the legal position in subsequent paragraphs hereunder. 6. The Revenue has, made out this case stating that the assessee was liable to discharge central excise duty on the stainless steel circles and stainless steel scrap as the assessee was a manufacturer and only job worker were exempted from payment of duty under Notification No. 214/86- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04. The assessee also raised question about classification of S.S. Circles and pleaded that circle cutting is not a process of manufacture. The assessee has referred to the Notification No. 12/2012-CE dated 17.03.2012 and claimed that under S.No. 203 of the said Notification, the process of cutting SS Patta Patti into circles is anyway exempted from payment of Central Excise duty. In addition to this the assessee also raised the issue of limitation, cum tax value and imposition of equal penalty as proposed in the show cause notice. 6.1 While adjudicating the matter and perusing the case laws relied upon by the respondent-assessee before the adjudicating authority, the learned Commissioner found merit in the assessees contention with reference to the Hon ble Apex court s decision in the case of Kartar Rolling Mills vs CCE [2006 (197) ELT 151 (SC)] that unless the undertaking is submitted to the effect, that duty on goods manufactured would be paid by the supplier of raw material, benefit of exemption Notification No. 214/86-CE was not attracted and the job worker only is liable to discharge the duty liability at the time of clearance of said goods from the premises of the job ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation. This is a substantive 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 liability cannot be shifted on the supplier of raw materials or semi-finished goods, as they were not the manufacturer of circles as well as scrap arising during the manufacture of circles. 6.3 Learned Commissioner agreeing with the contentions of the notices that the SS patta/ patti cleared by them on job work challans were in effect duty paid as they were working under compounded levy scheme, held that a basic purpose of Rule 16A of Central Excise Rules, 2002 and Rule 4(5)(a) of the Cenvat Credit Rules, 2004 was to protect the government revenue, if the goods were removed without duty payment for job work or if the assessee had taken Cenvat credit and removed the raw material or semi processed goods for job work. It was in such cases, it is the responsibility of the principal manufacturer to ensure the payment of duty at the time of clearance of goods at the end of job work or themselves after return of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Tribunal observed that the appellants have claimed that the Sodium Silicate Solution returned after job work to their customer was removed by the latter on payment of duty for home consumption from their foctory. This claim has not been contested by the Revenue. In the circumstances, the appellants were eligible for the benefit of the Notification subject to the surviving condition that the raw materialsupplier gave an undertaking to the Asst. Commissioner or Deputy Commissioner of Central Excise having jurisdiction over the appellants' factory to the effect that the goods would be removed (by the raw material-supplier) on payment of duty for home consumption. In such circumstances, the Tribunal had held that duty cannot be demanded from job worker for non-submission of undertaking by the principal manufacturer. 2. M/s OPG METALS PVT. LTD.Vs. COMMISSIONER OF C. EX., TIRUCHIRAPALLI [2016 (343) E.LT. 230 (Tri. Chennai)] : In this case, the raw materials were sent by principal for conversion under Rule 4(5)(a) of Cenvat Credit Rules, 2004 and invoices contained clear endorsement that material was sent for conversion under Rule 4(5)(a) of Cenvat Credit Rules, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tation, cum -tax-value, exemption to the job worker under Notification No. 12/2012-CE dated 17.03.2012 (S No. 203). These, therefore, were not taken up for consideration by him. 8. Learned Authorised Representative for the Revenue, Shri Sanjay Kumar Singh, vehemently argued in support of Revenue and placed heavy reliance in the case of Moon Chemicals (supra) to fasten onto the respondents the leviability of the duty as the principal manufacturer. 8.1 We however, find that the aforesaid decision of this Tribunal in the case of Moon Chemicals does not come to the support of the Revenue in the light of the facts of the present case. In the said case, the Department had sought to demand duty against the appellant therein as they had not followed the procedure set out in Notification No. 214/86-CE dated 25.03.1986. 9. Learned Authorised Representative also relied upon the decision of this Tribunal in the case of Poduval Industries vs Commissioner of Central Excise and Customs Service Tax, Cochin [2018 (362) ELT 149 (Tri-Bang)] wherein this Tribunal held as under: 4. To protect the interest of the Revenue, the duty will have to be paid by someone. In the instant case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nology Parks or supply to the United Nations or an international organisation for their official use or supply 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, from the whole of the duty of excise leviable thereon, which is specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), the additional duty of excise leviable thereon, which is specified in the Schedule to the said Special Importance Act and National Calamity Contingent duty leviable under sub-section (1) of section 136 of the Finance Act, 2001 (14 of 2001). (2) The exemption contained in this notification shall be applicable only to the said goods in respect of which,- (i) The supplier of the raw materials or semi-finished goods gives an undertaking to the Assistant Commissioner of Central Excise having jurisdiction over the factory of the job worker that the said goods shall be- (a) used in or in relation to the manufacture of the final products in his factory; or (b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s furnished an undertaking to the department/ jurisdictional authorities of the job workers. In the case of Kartar Rolling Mills vs CCE [2006 (197) ELT 151 (SC)] discussed supra, the benefit of exemption from duty to the job worker was denied essentially as no undertaking was filed by the principal. It is common knowledge that the responsibility in the central excise statute is on the manufacturer for payment of duty on the manufacture of finished goods which could either be a principal manufacturer or the job worker and in the event of finished goods produced by the job worker in the normal course the said job worker would be deemed to be the manufacturer. Also for entitlement of the availment of exemption notification, it is imperative that notification conditions are strictly complied with. The requirement of filing the declaration undertaking for availment of said exemption notification cannot be considered as mere procedural. In the event of non submission of such undertaking, ipso facto the said job workers of the respondent assessee automatically are the manufacturer of SS circles/ scrap so cleared by them and sent to the respondent assessee though, later cleared by them und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t appears to be a case of fait accompli and not based on sound legal tenets and discussions. The said paragraph is reproduced herein below: 4. To protect the interest of the Revenue, the duty will have to be paid by someone. In the instant case, the appellant is the principal and by not giving the undertaking, the appellant has developed a system to evade payment of Central Excise duty. By connivance of two parties, sovereign function of payment of duty cannot be avoided. In the instant case, the principal and the job worker with a conspiracy as stated above have made an attempt to evade the payment of duty. They tried to take advantage of the technicality of the law. 13.1 The said matter, therefore appears to have been decided on technicalities and with a view to fasten the duty liability onto the goods manufactured and cleared. 14. Case laws in support of the stance of the Respondent- Assessee : As against the reliance of the Revenue on certain case laws, the learned counsel relied primarily on the following case laws in support of the contention that the job worker was not exempted from payment of duty on goods manufactured and cleared, if no undertaking in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty from job worker 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 duty is transferred from the job work manufacturer to another person i.e. principal manufacturer. However when the principal manufacturer does not own up the liability to pay duty on finished goods, the provision of Notification No. 214/86-C.E., dated 25-3-1986 does not apply. In that case, it is the ultimate manufacturer i.e. the job worker who has to pay the duty. Following the procedure and conditions of the Notification (supra) only by the principal manufacturer, the job worker would be saved from payment of duty on goods manufactured by him. 7.8 In the case under reference, the facts of non-payment of duty on final products by the principal manufacturer is not disputed. The goods received from the job worker were not used in the manufacture of dutiable final products but in goods on which no duty was paid. In such case when the principal manufacturer did not intend to pay duty on the final products, the job worker who is manufacturer of intermediate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7.10 In the present case the fact remains is that neither the goods after job work 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 manufacturer of goods i.e. the job worker. Since the principal manufacturer pays the duty on the product arising out of manufacture even at the job worker s end, he is eligible to avail credit. The Rule 4(5)(a) thus is a facility to the principal manufacturer to send goods for job work on which Cenvat has been availed. It is nothing to do with the duty payment of goods. 7.11 Rule 4(6) is a facility to the principal manufacturer to clear the goods directly from the premises of job worker after payment of duty. Notably it is not the case of the appellant that the principal manufacturer paid duty at anytime as the goods manufactured by him were exempted from duty. Thus the liability for payment of duty on such intermediate goods manufactured by the job worker is on job worker only. 16. In view of the facts aforesaid and the decision of the Larger Bench rendered in the matter, there remains no more any ambiguity on the su ..... X X X X Extracts X X X X X X X X Extracts X X X X
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