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2013 (9) TMI 312 - AT - Central ExciseDuty Liability - Stitched Garments From Fabric - Job Work - Whether the appellants were liable to pay excise duty in respect of garments stitched by them from fabric bought or brought by the customers - Held that:- Tailor-made garments stitched to the measurement of one individual was also goods which can be brought and sold in the market and thus were excisable - The argument with reference to the budget speech was a very weak argument because reference to such material extraneous to the enacted law can be made only in situations where there was some doubt regarding scope of words and expressions used in the concerned enactment - it was seen the budget proposal itself got changed as normally happened during the consideration stage of the budget as evidenced by rescinding of Notification No. 12/2001-C.E. - So we do not find any reason to deviate from the earlier decision dated 2-5-2008 of the Tribunal in the matter of dutiability of the garments stitched from fabrics bought or brought by customers. Ready-made garments were also stitched according to certain measurements for different sizes and if such garments can fit many customers there was no reason why a garment made for one individual cannot fit another person - the argument that such garments cannot be sold in the market was not acceptable - For deciding marketability, what is to be considered was not whether it was actually brought to the market and sold but whether it can be brought to the market and sold – This rule does not state that for textile items job-worker was not the manufacturer - It only says that the duty was to be paid by the person supplying the material as if he was the manufacturer - the appellant had no obligation to pay excise duty on garments stitched out of fabrics bought or brought by the customers - Further if duty liability was determined as if the customer was the manufacturer he should be eligible for exemption for SSI units also. As per Rule 7AA of the Central Excise Rules, 1944 and its successor rules, the responsibility to pay duty on textile articles got manufactured on job-work basis was put on the person who gets goods manufactured on job-work basis - He had to discharge such liability “as if he was the manufacturer” - This rule does not say anywhere that the person supplying the raw material would be the manufacturer - The rule only says that such person had to discharge the liability and that in the normal course was done by the manufacturer. The matter as to who was the manufacturer when raw material was supplied by a person and manufacturing activity was done by another first arose in the context of deciding eligibility for exemption notification issued under Section 5A of the Act mentioning criteria with reference to the manufacturer. Lifting of Corporate Veil - Clubbing of Entities - Another issue made out by Revenue was that these firms did not have any separate existence and were floated just to avail the benefit of small scale exemption, in respect of garments shown to have been manufactured by these two firms – Held that:- The quantum of duty involved on account of the issue of clubbing was not coming out very clearly in the order because such demand was jumbled with a few other issues and hence it needed to be re-determined - The claim for exemption under Notification 12/2001-C.E. for the period 1-3-2001 to 30-4-2001 also needed to be examined and the consequence of such claim on the duty demanded needed to be determined - appellant had substantially paid the duty on this count and had at the investigation stage expressed their willingness to settle this matter if that was the only issue involve. K. P. POUCHES (P) LTD. Versus UNION OF INDIA [2008 (1) TMI 296 - HIGH COURT OF DELHI ] - the respondents should be given an opportunity for settling the matter by payment of the dues as envisaged in Section 11AC of the Act - the role played by each of the persons may be specifically stated and penalty determined considering the lower duty liability that would arise as per this order and the co-operation extended by the appellants by making advance payment and interest made by the main company during investigation stage – order set aside - Decided in favour of Assessee.
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