2011 (3) TMI 1191 - AT - Central Excise

Job work - duty liability - appellants receiving goods from their principal under the cover of challan issued under Rule 4(5)(a) of the CENVAT credit Rules 2001 and after completion of the job work goods were returned to their principal manufacturer - fabrics are not covered under Notification 214/86 duty has been demanded on such clearances by dept. - Held that - In the case of Trico Process P. Ltd. (2005 (5) TMI 152 - CESTAT MUMBAI) it was held that inputs returned to principal manufacturer no demand can be sustained against job worker in terms of provisions of Rule 57F(4) of the Rules or under Rule 4(5)(a) of the CENVAT Credit Rules 2001. Therefore the Tribunal held that no demand is sustainable in such a situation no duty liability can be fastened upon him even if the goods are not specified under Notification 214/86-CE As it has been concluded in the above cited judgment that provisions of Rule 4(5)(a) of CENVAT credit are independent of the Notification order set aside and appeal allowed

Summary

Issues: Duty liability on processed fabrics received on job work under Rule 4(5)(a) of CENVAT Credit Rules, 2001 not specified under Notification 214/86.

Analysis:
1. The case involved a dispute regarding the duty liability on processed fabrics received on job work under Rule 4(5)(a) of the CENVAT Credit Rules, 2001, which were not specified under Notification 214/86. The appellant, a processor of man-made fabrics, received processed fabric on job work and returned them to their principal under a job work challan issued under Rule 4(5)(a). Duty demands were raised against the appellants, alleging that the fabrics were not covered under Notification 214/86, and hence, duty was demanded on such clearances along with interest and penalties.

2. The appellant argued that the subject clearances under the job work challan did not attract duty, citing precedents such as Mukesh Inds. vs. CCE 2009 (248) ELT 203 (T-Ahd) and Akash Fashions Pvt. Ltd. 2009 (245) ELT 871 (T-Ahd) to support their case. The Tribunal considered the submissions and observed that the goods were received from the principal under Rule 4(5)(a) and returned after job work, even though they were not specified in Notification 214/86-CE. The Tribunal noted that the job work was done under the provisions of Rule 4(5)(a), which is similar to Rule 57F(4), and held that the benefit of Rule 57F(4) cannot be affected by Notification 214/86-CE.

3. The Tribunal relied on previous judgments and held that no duty liability could be imposed on the job worker in such situations where the inputs were returned to the principal manufacturer. The Tribunal emphasized that the provisions of Rule 4(5)(a) of the CENVAT credit rules are independent of the Notification. Applying the legal principles established in previous cases, the Tribunal concluded that the appellant, being a job worker, was not liable for duty even if the goods were not specified under Notification 214/86-CE. Consequently, the Tribunal set aside the impugned orders and allowed the appeals of the appellants with consequential relief.