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TMI Blog2007 (11) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... r on their clearance from the job worker's premises. This is very clear on going through the provisions of Rule 12B. In the present case, the appellants who manufacture grey fabrics sent the grey fabrics to the job worker. The job worker undertook certain processes like bleaching, dyeing, printing, etc., which amounted to manufacture. Up to July, 2003, in terms of Rule 12B, the job worker maintained all the Central Excise formalities and cleared the goods on payment of duty. The valuation adopted was based on the Apex Court's decision in the Ujagar Prints case. In other words, the value is equal to the cost of the raw materials plus the job charges. However after July, 2003, the appellants who were the suppliers of raw materials viz., Grey Fabrics to the job workers opted to pay the duty on the goods manufactured by the job worker. After the goods had been processed by the job worker, they were returned to the appellants. The appellants cut the processed fabrics to specific lengths, folded and packed them. The finished product in the hand of the appellant was Dhotis, lungies, bed-sheets, etc., and the appellants sold these goods. Now, the dispute involved is regarding the correct v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er may, at his option, agree to obtain registration, maintain accounts, pay the duty leviable on such goods, prepare the invoice and comply with the other provisions of these rules. In such a case the provisions of these rules shall not apply to the said person. The job worker, may, at his option, authorize the said person to, on his behalf as his agent, maintain accounts, pay duty, prepare invoice and comply with any of the provisions of these rule except that of Rule 9: Provided further that the job worker may make an option to undertake the activities mentioned in this sub-rule as an agent or person authorized by the said person and in such a case, the said job worker shall be deemed to be the said person. (2) If the said person desires clearance of excisable goods for home consumption or for exports from the premises of the job worker, he shall pay duty on such excisable goods and prepare an invoice, in the manner referred to in rules 8 and 11 respectively except for, mentioning the date and time of removal of goods on such invoice. The original and the duplicate copy of the invoice so prepared, shall be sent by him to the job worker from whose premises the excisable goods af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods mentioned in sub-rule (3) or, as the case may be, from another job worker sent by him in terms of clause (ii) to sub-rule (7) shall duly acknowledge the receipt of the goods on the said document. (6) Notwithstanding anything contained in these rules, the job worker shall not be required to get himself registered or shall not be required to maintain any record evidencing the processes undertaken for the sole purposes of undertaking job work under these rules unless he has exercised his option in terms of the first or the second proviso to sub-rule (1). (7) The job worker, with or without completing the job work, may, - (i) return the goods without payment of duty to the said person; or (ii) send the goods without payment of duty to another job worker; or (iii) clear the goods for home consumption or for exports. subject to receipt of an invoice from the said person, as mentioned in sub-rule (2). The job worker shall clear the goods after filling in the time and date of removal and authenticating such details. The rate of duty on such goods shall be rate in force on date of removal of such goods from the premises of the job worker. No excisable goods shall be removed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exceeds the threshold limit of Rs. 25 lakhs (or Rs. 30 lakhs, as the case may be), no further exemption would be available. In such cases, after the exemption limit is crossed, duty would be payable and the trader who is getting the job work done would have to be registered, and pay duty. In case, the total clearance levels cross the eligibility limits of Rs. 30 lakhs (or 40 lakhs, as the case may be) all past clearances become dutiable and the trader/traders/weaver, would be required to discharge duty on earlier clearances. (f) The following illustrations are given to explain the above, - * Three traders A, B and C get grey fabrics manufactured from job worker 'X'. The value (raw material cost + job charges) of the goods made on job work for each of the trader is Rs. 20 lakhs. Since total clearance value of the job worker is Rs. 60 lakhs, he is not eligible to claim any benefit under Notification 35/2003-C.E. Duty is payable on his entire clearance. * Three traders A, B and C get grey fabrics manufactured from job worker 'X'. In addition, X also clears grey fabrics manufactured by him as independent weaver. His clearance as independent weaver is Rs. 15 lakhs. Thereafter, he und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty, we emphasize the point that duty is leviable at the job workers premises. From the examples given by the Board in the circular, it is very clear that the value should be taken in terms of the material cost and job carges. Therefore, there is very strong force in the appellant's contention that the value to be adopted should be based on the clearances at the job worker's premises. Further, the learned Advocate pointed out that even though the processed fabrics are returned to the appellant, the appellant would simply cut, fold and packs them and these processes in terms of Chapter 52 do not amounts to manufacture. Therefore, even though the appellant adds certain values or makes value addition and also undertakes certain processes, since these processes do not amount to manufacture, the value addition cannot be subjected to duty. The learned Advocate urged the point that the value adopted by them is correct in terms of Rule 12B and the Board's Circular dated 30-10-2003. He urged the point that goods have to be assessed in the condition which they are cleared from the place of manufacture. In the present case, the manufacture is complete at the job worker's premises and when th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11/- pertains to job work valuation. Duty to the tune of Rs. 6,68,405.60 pertain to goods manufactured prior to 31-3-2003 and cleared later to job worker. These goods are actually grey fabrics. Duty amounting to Rs. 4,23,901/- pertain to goods manufactured and cleared prior to 31-3-2003 and sold thereafter. In both these cases, it was urged that the goods were manufactured prior to the imposition of levy of duty on grey fabrics. It was urged that it is well-settled that when there is no levy of duty on the date of manufacture of the goods and when they are cleared after imposition of levy, no duty can be paid on the same. The learned Advocate relied on the following decisions: (a) Wallace Flour Mill Company Ltd. v. CCE - 1989 (44) E.L.T. 598 (S.C.) (b) CCE v. Vazir Sultan Tobacco Ltd. - 1996 (83) E.L.T. 3 (S.C.) (c) CCE v. Polyset Corporation - 2000 (115) E.L.T. 41 (S.C.) (d) Shree Synthetics Ltd. v. UOI & Ors. - 1999 (113) E.L.T. 774 (S.C.) In terms of the above decisions, the liability of duty would be determined on the date of manufacture but not the date of clearance. 5.4 It was further urged that the show cause notice was issued on 11-3-2005 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the job worker's premises. In other words, the liability to pay duty arises at the time of clearance from the job worker's premises. In fact, in the present case the processes undertaken by the job worker amounts to manufacture. Therefore, when the job worker returns the processed goods to the appellants, that amounts to clearance and the duty liability crystallizes at that stage. As per the Board's clarification and the circular issued, the valuation is done on the basis of the principles enunciated in the Ujagar Prints case. That means the value to be adopted for payment of duty is basis of the raw materials cost plus the job charges. After receiving the materials, the appellant simply cuts them and packs them and then thereafter he sells the same. In that process, definitely there is value addition but in terms of Rule 12B and the Board's Circular, the value to be adopted is only the value at the end of the job workers premises. Moreover, the processes undertaken by the appellant do not amount to manufacture. Therefore, we hold that the appellants discharged the duty liability correctly and there is no merit in the demand of the revenue for fixing the duty liability on the sal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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