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TMI Blog2012 (10) TMI 626X X X X Extracts X X X X X X X X Extracts X X X X ..... al No. 30/2008 were partially allowed. The short question that arises for determination is as follows: "Whether the respondents were liable to pay excise duty in respect of garment(s) stitched by them from fabric either brought by the customers themselves or bought by the customers from the Respondent for stitching purpose?" 2. The facts relevant for answering this question are that respondents are engaged in the manufacture of readymade garments falling under the "Chapter Heading 6201" of the First Schedule of the Central Excise Tarrif Act, 1985. The respondents are also engaged in stitching garments out of fabric bought by customers from their shop or brought by the customers from outside. In connection to the latter activity, it is a m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded the Tribunal's reasoning and conclusion. Reliance was placed on Rule 7AA, and its successor Rules, Rule 4(1) and 4(3) of Central Excise Rules, 2001 and 2002. It was urged that according to these rules, liability to pay excise duty is that of those who supply the raw materials. Therefore, the excise duty, if any, was payable by the individual customers, and not by the respondents. Counsel also drew this Court's attention to Notification No. 7/2003-C.E. dated 1.3.2003 to contend that garments got stitched from one's own fabric and based on measurements was exempted from excise duty. Reasoning and Conclusion 5. This Court has considered the submissions of the parties. The Tribunal's reasoning and conclusion on this issue as under: "Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssories manufactured or got manufactured for personal use and not intended for sale Explanation.- This exemption shall also apply to such article of apparel or clothing accessories knitted or stitched by a tailor from material supplied by the customer for the personal use of the customer." 7. This notification makes it clear that tailoring establishments that stitch garments in a customized manner as per the customer's specification are exempted from excise liability thereon in cases where the fabric is supplied by the customer himself. The notification was made by the Central government in exercise of its powers under Section 5A(1) of the Central Excise Act, 1944, which empowers it to grant exemption from excise duty in public interest. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s factory." Rule 4(1) and Rule 4(3) of the Central Excise Rules 2001 and 2002: "Duty payable on removal.- (1) Every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in rule 8 or under any other law, and no excisable goods, on which any duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided: Provided that the goods falling under Chapter 61 or 62 of the First Schedule to the Tariff Act, produced or manufactured by a job worker may be removed without payment of duty leviable thereon and the duty of excise leviable on such g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e job-worker may also get part of the processing required for the manufacture of the said goods done by another person but should bring back the same for the completion of the manufacturing process in his factory. Explanation II.- For the purposes of this rule, excisable goods manufactured in a factory and utilised, as such or after subjecting to any process, for the manufacture of any other commodity, in such factory shall be deemed to have been removed from such factory immediately before such utilization." 9. The Tribunal's reasoning and conclusion on this issue are as under: "27. Under the special provisions made as per Rule 7AA of the Central Excise Rules, 1944 and its successor rules, the responsibility to pay duty on textile artic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the customers. Thus, the argument that in the case of textile goods got manufactured on job work basis during the period 2001-2004, the job worker has to discharge excise duty liability is not acceptable. Further if duty liability is determined as if the customer is the manufacture he should be eligible for exemption for SSI units also. But this issue need not be determined in this proceeding because the persons to pay duty are not before us." 10. The Tribunal, thus, held that the respondent (appellant before the Tribunal) was not liable to pay excise duty. The same, it held, shall be determined as if the customers were the manufacturers, and that they may be eligible for SSI (small scale industry) exemption. The Court does not discern a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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