TMI Blog2007 (10) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... e appellants received raw materials from the principal manufacturers namely M/s. Vishnu Synpac and M/s. Kudva Plastisac. After converting these raw materials into HDPE tapes and thereafter fabrics, the appellants have cleared the goods to the principal manufacturers and in certain cases on the directions of the principal manufacturers, they had cleared it to their buyers without payment of duty. The contention of the Revenue is that the appellants are liable to discharge duty on the goods manufactured for M/s. Kudva Plastisac and M/s. Vishnu Synpac. Further the appellants were availing of the benefit of Notification No. 9/2002. According to the Revenue, the clearances of the goods meant for M/s. Vishnu Synpac and M/s. Kudva Plastisac had not been included in the aggregate value of the clearances by the appellant. Once these values are included it was contended that they would not be entitled for the benefit of the small-scale exemption for 2001-2003. The Revenue issued show cause notice on the basis of the investigation and the Adjudicating Authority passed the impugned order. 3. The Adjudication authority confirmed a demand of Rs. 42,57,602/-, which represents the duty on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. They have actually sent the raw materials to the appellants who manufacture HDPE tapes out of the raw material supplied and these HDPE tapes were used for making woven fabrics etc. It is on record that the appellants returned the fabrics or the finished products to the principal manufacturers. In this connection a Circular dated 20-3-1997 issued by the CBEC is very relevant. The said circular is reproduced below: Circular No. 306/22/97-CX., dated 20-3-1997 Modvat credit - Inputs used by job workers in job working contracts Circular No. 306/22197-CX., dated 20-3-1997 [From F. No. 2671127196-CX. 8] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise and Custom, New Delhi Subject : Availability of Modvat credit on inputs used by job workers in job-working contracts - Regarding . Instances have come to the notice of the Board where job workers ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sends raw materials to the job worker and the goods are returned to the principal manufacturer, he can avail exemption on the goods manufactured by a job worker. For clarity we reproducing the said Notification: Notification No. 83/94-C.E., dated 11-April-1994 Job work - Exemption to goods specified in the SSI Exemption Notification No. 1/93-C.E., if manufactured on job work basis In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excises and Salt Act, 1944 (1 of 1944), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts excisable goods of the description specified in the Annexure to the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 1 /93-Central Excises, dated the 28th February, 1993 and falling under the Schedule to Central Excise Tariff Act, 1985 (5 of 1986) (hereinafter referred to as the specified goods) manufactured in a factory as job work, from the whole of the duty of excise leviable thereon, which is specified in the said Schedule, subject to the condition that the supplier of the raw ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtakes to pay excise duty, if any, payable on such goods but for the exemption contained in this Notification as if such goods were manufactured by the said supplier and sold on his account. Therefore, this Notification No. 83/94 casts a responsibility on the supplier of raw material and the supplier of raw material can avail exemption provided the conditions are followed. In other words, if the supplier of the raw material does not want to avail this exemption Notification No. 83/94, he is duty bound to discharge the duty liability on the goods received from the job worker. Therefore, this position has to be understood clearly. The job worker has actually been defined even in the Notification and it is also defined in the Cenvat Credit Rules also. The meaning of job work and job worker has been made very clear. The responsibility or the liability to discharge duty is on the raw material supplier. The job worker in this case has returned the goods. That is an important point. 5.4 Further in the present case, the job worker has not availed any credit on the inputs. In fact, no information is available on the credit taken on the inputs. The inputs obviously have been purchased by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts with an intention to evade duty. So the longer period is not applicable. 5.7 The finding of the learned authority that the relation between the appellant and raw material supplier is on principal-to-principal basis and therefore, the raw material supplier is not the manufacturer and the job worker who is the appellant is only the manufacturer does not stand to logic. The relation between the appellant and the raw material supplier has to be seen in respect of the goods or raw materials supplied by the principal manufacturer. As far as the raw materials supplied by the principal-manufacturer are concerned, the appellant in terms of the agreement is bound to convert them into finished products and send them back. It is not understood how the department and especially the Adjudicating Authority holds that the principal manufacturer or the raw material supplier is not liable to pay Central Excise duty. It is also a fact and it is on record that the raw material supplier sold the goods. Even though the show cause notice was issued to the two raw material suppliers for imposing penalty, the Adjudicating Authority has given a finding that the raw material suppliers have the opt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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