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2009 (7) TMI 591 - CESTAT, CHENNAIDemand- The evidence indicate that the Appellant (PM) was engaged in the manufacture of denim fabrics, whether or not processed, falling under Central Excise Tariff Heading 5702.10 and that PM was selling the same to KGD without payment of central excise duty. PM was getting dyed/sized yarn from KGD (weaving) and after completion of job work, the fabrics were returned by PM to KGD. Held that- The demand has been confirmed on manufacture and clearance of denim fabrics on their own account against PM & PTM. The transaction between KGD on one hand and PM/PTM on the other is in the nature of ‘principal to principal’ in as much as there was sale of goods. PM & PTM have procured their own material and manufactured Denim fabrics and cleared the same without payment of duty. The quantity of denim and sized fabrics received for weaving from KGD and returned to KGD on job work basis has not been taken into consideration while calculating the demand of duty. The contention that the appellants placed purchase orders under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, is only partially correct in as much as they received dyed yarn from KGD for job work and after the completion of job work, the fabrics were returned to KGD and the above movement is covered under Rule 4(5)(a) ibid. However, the same procedure cannot be adopted for the yarn procured by PM/PTM on their own account and they cannot be treated as job workers in respect of such yarn. Therefore, PM/PTM are real manufacturers of Denim fabrics manufactured out of dyed yarn procured on their own account and they cannot be treated as job workers. Therefore, duty liability of PM/PTM is sustainable. Thus uphold the duty demands and penalty.
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