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2016 (5) TMI 745 - CESTAT NEW DELHI

2016 (5) TMI 745 - CESTAT NEW DELHI - TMI - Period of limitation - Job-work basis - Demand of excise duty - carrying out the process of lamination on job work basis on the material supplied by Bus Body Builders - Held that:- the period involved in the show cause notice is 1991-92 to March 1995 whereas the show cause notice was issued on 31.7.1996 accordingly entire demand is beyond one year of normal period. On perusal of the records and submissions,it is found that for the purpose of movement o .....

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cated by the Central Excise authorities of the jurisdiction of bus body builders. In the classification list also whereby notification No. 214/86-CE dt. 25.3.1986 was clearly declared. - The jurisdictional excise authority of the body builders despite knowing that the bus body building is exempted, pre-authenticated the Annexure II challans. Therefore entire facts related to the bus body builders and the movement of goods and manufactured of goods under job work was very much in the knowled .....

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dvocate with Ms. Aparna Hirandagi, Advocate, and Shri Akshit Navenay, Advocate ORDER PER : RAMESH NAIR The appeal of the Revenue is directed against Order-in-Original No. 01/KKS/04-05 dt. 28.6.2004 passed by Commissioner of Central Excise, Mumbai-III, whereby Ld. Commissioner dropped the demand proceeding raised against the appellant however a penalty of ₹ 10 lakhs each was imposed on M/s. Bharat Coach Builders Pvt. Ltd., M/s. Bharati Workshop, M/s. Antony Garages Pvt. Ltd. & M/s. In C .....

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fication No. 214/86-CE dt. 25.3.1986 and/or under erstwhile Rule 57F(2) of Central Excise Rules,1944, as prevailing during the material time. After the job work, the respondent returned the job work goods under the same Annexure II challans to the Bus Body Builders without payment of duty, thus neither the respondent nor the Bus Body Builders, who are the principal supplier of raw material paid the duty on job work goods. The Bus Body Builders used the said job work goods in the further manufact .....

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efore the respondent being a job worker wrongly availed the exemption notification No. 214/86-CE accordingly is liable to pay the excise duty being a manufacturer. The show cause notice was issued wherein the excise duty demand was raised against the respondent and the penalty under Section 209A was proposed to be imposed on the bus body builders who supplied the raw material under the cover of Annexure II challan. The adjudicating authority, while adjudicating the show cause notice in the impug .....

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or the payment of excise duty even though Notification No. 214/86-CE bind the principal supplier of raw material for discharging excise duty and exemption on job work is subject to certain condition that the principal raw material supplier will discharge excise duty on their final product. In this case admittedly the bus body builders have not discharged the excise duty on their final product however they cleared the goods under exemption. Since the principal manufacturer has not complied with t .....

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e bar, he submits that the entire modus operandi was known to both respondent as well as the bus body builders which is evident from the letters written by respondent to the bus body builder, regarding movement of goods under notification No. 83/94 and 84/94-CE both dt. 11.4.1994. Therefore both the principal manufacturer as well as the respondent colluded to evade Central Excise duty therefore the extended period of demand is invocable. 4. At the outset, Shri M.H. Patil, Ld. Counsel, alongwith .....

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uty on their final products wherein the job work goods is used. The respondent received the material under the cover of Annexure II challans issued under Rule 57F(2) and/or Notification No.214/86-CE dt.25.3.1986 whether the condition of Notification No. 214/86-CE is fulfilled or otherwise it is a look out of the principal supplier of the raw material for the reason that as per the clear condition prescribed in the Notification No. 214/86-CE. It is the principal manufacturer who has to bind himse .....

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ondent in their classification list filed from time to time clearly declared the availment of the exemption notification No. 214/86. The Ld. Commissioner considering all these material evidences clearly held that the demand is time bar as there is no suppression of fact on the part of the respondent. 5. We have carefully considered the submissions made by both the sides. On the issue of demand being time bar, we find that the period involved in the show cause notice is 1991-92 to March 1995 wher .....

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filed intimation along with undertaking to the Central Excise Authority of job worker. The material was supplied under the cover of Annexure II challan. The said Annexure II challan was pre-authenticated by the Central Excise authorities of the jurisdiction of bus body builders. In the classification list also whereby notification No. 214/86-CE dt. 25.3.1986 was clearly declared. The jurisdictional excise authority of the body builders despite knowing that the bus body building is exempted, pre- .....

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the impugned order which is reproduced below: (iii) The assessee, M/s.Virama Laminates was carrying out the job work since 1989 under Notification No. 214/86 and/ or Rules 56B or 57F(2). They filed the classification lists from time to time which were approved by the Department. They have submitted copies of their classification lists for the period 93-94, 94-95, which have been approved by the Department. In these lists It has been very clearly mentioned at Sr.No:4 as under:- "Other articl .....

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e were also carrying on the said process on job work basis or that the Department came to know the same only when they made the alleged surprise visit on 23.12.1994. It is also a matter of record that the Bus. Body Builders, being the suppliers, sent their goods for job work to the assessee under Annexure-II challans issued under the provisions of the said Notification No. 214/86 and / or Rule 57F(2) of the Rules. As required under the said Notification No. 214/86 the said suppliers of the raw m .....

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k basis. In the Circumstances, the said Show Cause Notice issued on 31.7.1996 cannot invoke the extended period of 5 years under the proviso to Section l1A(1) of the said Act on the alleged ground that the department came to know only after they made a surprise visit on 23.12.1994. The Show Cause Notice is therefore barred by limitation and on this ground alone the demand made is not sustainable. The benefit under Notification No. 214/86 dated 23.3.1986 is to be availed by the suppliers of the r .....

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d Notification sets out that it is the supplier who has to undertake the responsibility of discharging the liabilities in respect of the Central Excise duty leviable on the finished products. On the other hand, once the job worker receives the goods from the supplier under Annexure-II challans he is neither required or liable to ascertain whether the said goods for job working is liable for payment of duty or not or whether the final products are liable for duty or not and whether the supplier i .....

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case the Bus Body Builders (suppliers) are situated in different ranges of the Excise Authorities and each such area Authority has preauthenticated the Annexure-II challans issued by the Bus Body Builders which were valid at least until 1993 while the tariff entry conditions allegedly remained the same for availing benefit under Notification No. 214/86. Thereafter, if the final products have become exempt from payment of Excise duty with effect from 1.3.1993 as alleged, it was the obligation, r .....

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The allegation that by virtue of Entry No.18 of the Table to Notification No. 162/86 CE dated 1.3.1986 as amended by Notification No. 63/93 CE dated 28.2.1993 manufacturers of Bus Bodies of the motor vehicles were exempted from payment of Excise Duty is also not correct. It is pertinent to note that in Notification No. 63/93 CE dated 28.2.93 effective rate of duty for the goods under Chapter sub-heading 87.02 is 40 or 15 as mentioned at Serial No:2 thereof and simultaneously under Serial No.17 .....

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milar condition is fulfilled i.e. if no credit of the duty paid on the chassis or inputs is taken under Rule 56A or 57A of the said Rules. In the circumstances, the manufacturer of Bus Bodies depending on the circumstances would have to pay duty on the final products or claim exemption from payment of total duty, if they fulfill the said condition. The assessee not informed by the Bus Body Builders nor could they have known, when the goods were received from the said Bus Body Builders, that they .....

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ds for processing to the assessee under Annexure-II Challans claiming exemption under Notification No. 214/86, would not claim exemption from payment of total Excise Duty under Serial No.17 or 18, as the case may be. The assessee were right in believing, therefore, that the Bus Body Builders would be making payment of duty on the final products and therefore, had sent the goods for processing to the assessee under Annexure-II challans. The assessee however, were never informed nor were aware as .....

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the Bus Body Builders were falling under Heading 87.07. In view of the above, it would be impossible to conceive that the job worker should know when he takes on the job work of processing raw material supplied by the supplier, the final product which is manufactured by a supplier of raw materials, its classification and whether the supplier has availed credit under 57A or whether the supplier is going to clear the final product on payment of duty. Such procedure is not at all envisaged and cont .....

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not be held responsible for non-payment of duty while clearing goods from factory which was received under Annexure-II challans. In a nutshell, since the goods were received under Annexure II challans, the suppliers had furnished all undertakings and given all intimations as required under Notification No. 214/86 and final products manufactured by the suppliers, not being fully exempt but only being conditionally exempt under Notification No: 63/93 dated 28.2.93, the assessee were right in their .....

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aluminium sheets. As there has not been any act of suppression by the assessee, the entire demand made in their Show Cause Notice dated 31.7.96 demanding duty from March'93 to March'95 is time barred for recovery. (iv) On the basis of a letters dated 27.4.94, 4.5.94 and 15.1.95 addressed by the assessee to their customer Bus Body Builders, it has been alleged in the Show Cause Notice that the assessee, by advising the Bus Body Builders to file intimations under Notification No. 83/94 and .....

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re therefore fully conversant with Central Excise laws and procedures. The assessee had no control or nexus with their customers Bus Body Builders. The letters dated 27.4.94, 4.5.94 and 15.1.95 merely advises their clients that they can avail of the facility of the Notification No. 83/94 and 84/94 provided they strictly fulfill the conditions mentioned therein.These notifications are public documents. I do not find any malafide intent on the part of the assessee in advising their clients to avai .....

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ed in the Notification No. 83/94 and 84/94. Had they followed the advice correctly, it would have been. clear to them that they are not entitled for the facility of these Notifications as they were not eligible for benefit of 551 Notification 1/93, their finished goods Bus Body not being specified goods under Notification No. 1/93. In any case, there is an age old maxim that ignorance of law is no excuse. A letter advising the clients that they can avail facility of a notification, provided they .....

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