TMI Blog2019 (8) TMI 1363X X X X Extracts X X X X X X X X Extracts X X X X ..... ses of job worker itself. Circular No. 56/56/94 CX dated 14.09.1994 is a precise clarification with respect to the impugned issue of entitlement to SSI exemption to the manufacturer who is supplying raw material to the another person/ the job worker for the manufacture of same final product as is manufactured by him. It is not disputed that job worker is independently clearing the goods manufactured by him. Except receiving raw material from appellant, there is nothing on record to show that job worker herein was an agent of raw material supplier or a dummy. We are of the opinion that adjudicating authority below has committed an error while denying the relationship of appellant and job worker as the one on principal to principal basis. We are, therefore, of the opinion that job worker in the present case, has independent liability towards excise duty. His clearances have wrongly been clubbed with the clearances of the appellant. In the present case, after the raw material being provided by the principal manufacturer/ the appellant herein, to the job worker there was no further control of the former upon the job worker nor did the goods manufactured by the job worker are retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E dated 01.03.2003. Department during the scrutiny of balance sheets and other records as that of profit and loss account for the year 2007-08 and 2008-09 Department noticed that appellant had booked sales of ₹ 1,19,56,025/- against its own manufactured goods and of ₹ 4,26,01,025/- against the goods manufactured on job work basis and that they are not registered under Rule 9 of Central Excise Rule, 2002 (the Excise Rules) that they formed an opinion that the appellant is wrongly availing the SSI exemption alleging that the value of clearances made by appellant from its own factory as well as from the factories of the job worker are liable to be clubbed in terms of the aforesaid Notification No. 08/2003 CE dated 01.03.2003. Based thereupon the show cause notice No. 580 dated 25.04.2012 was served upon the appellant proposing the recovery of Central Excise duty amounting to ₹ 92,02,177Cr. alongwith the interest at the appropriate rate and the proportionate penalty. The said proposal was confirmed vide the Order-in-Original No. UDZ-EXCUS-000-COM-0001-18-19 dated 18.04.2018 as was passed by Commissioner, Central Excise Commissionerate, Jaipur II. An Appeal was preferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplying the raw material for the same so as to deny him the benefit of SSI exemption. The decision of Hon ble Apex Court in the case of CCE, Goa Vs. Cosme Farma Laboratories Ltd. reported at 2015 (318) E.L.T. 545 (S.C.) has also been impressed upon with emphasis that when the manufacturing activity is done by the job worker with its own labour force, job worker becomes the manufacturer. The mere fact that it had to adhere to the quality control or specification prescribed by the manufacturer will not take away his liability to pay the duty and his manufacturing activity cannot be clubbed. The decisions of Hon ble High Court of Gujarat in the case M/s. Prolite Engineering Co. Vs. Union of India reported at 1995 (75) E.L.T. 257 (Guj.) and M/s. Supreme Tank Pvt. Ltd. Vs. CCE reported at 2014 (314) E.LT. 725 (Tri. Ahmd.) and the Circular No. 56/56/94 CX dated 14.09.1994 are also relied upon to corroborate the same. It is further submitted that ownership of raw material is not relevant for ascertaining as to who is the manufacturer. The decision of Hon ble Apex Court in the case M/s. Ujagar Prints Vs. Union of India reported at 1988 (38) E.L.T. 535 (S.C.) has been relie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Central Excise Act, 1944. Manufacture includes any process,- (i) incidental or ancillary to the completion of a manufactured product; and (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule involves packing or repacking of such goods in a unit container of labelling or re-labelling of containers including the declaration of retail sale price on it or adoption of any other treatment on the goos to render the product marketable to the consumer and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable, goods, but also any person who engages in their production or manufacture on his own account; 5.4 The Hon ble Apex Court in the case of Union of India Vs. Delhi Cloth and General Mills reported at 1977 (1) E.L.T. 199 (S.C.) has held that the word manufacture used as a verb is generally ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with respect to the impugned issue of entitlement to SSI exemption to the manufacturer who is supplying raw material to the another person/ the job worker for the manufacture of same final product as is manufactured by him. Paragraph 4 thereof reads as follows: 4. In view of the above, in cases where goods are manufactured by job worker out of raw materials received from a person or a manufacturer and where the relationship between the raw material supplier and the job worker is on principal to principal basis, the job worker will be the actual manufacturer. The question as to whether the relationship between the raw material supplier and the job worker is on principal to principal basis will depend on the relevant facts and circumstances of the case. The relationship could be ascertained with reference to facts such as whether the job worker has received any financial assistance from the supplier of the raw material, whether the supplier of the raw material exercises any control over the management of the affairs of the job worker and whether the job worker is an independent entity and not merely a dummy or an agent of the raw material supplier. If it is found t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the latter is entitled to avail the cenvat credit on such inputs provided the inputs are returned by the job worker after requisite process within 180 days of the receipt thereof. (iii) In furtherance of Notification No. 214/86 CE dated 25.03.1986 when the principal manufacturer gives an undertaking to the Jurisdictional Commissioner of the job worker to pay the duty. 8. In the present case, after the raw material being provided by the principal manufacturer/ the appellant herein, to the job worker there was no further control of the former upon the job worker nor did the goods manufactured by the job worker are returned to the appellant. The question of return within stipulated period of 180 days has no meaning in the given circumstances. Also the principal manufacturer/ the appellant had not tendered any undertaking to pay the duty on the activity of the job worker. It has already been observed about the settled law that the ownership of goods and providing of raw material are not the mere criteria to decide the duty liability. It has also been observed that the job worker is independently manufacturing the final product in its own premises withou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearances under SSI exemption Notification No. 8/2003 dated 01.03.2003. 11. Finally coming to the issue of limitation we observe that the clearances for the period w.e.f. April, 2007 to August, 2009 has been objected vide show cause notice of 25.04.2011. The show cause notice is definitely beyond the period of one year. 12. From the above discussion it stands clear that in fact there was no liability of the appellant to pay duty with respect to the goods got manufactured by the job worker, as such clubbing thereof with the clearances of the appellant is absolutely wrong. Hence, there was no reason that the appellant to not to avail the SSI exemption. Hence, there is no act of having any intent to evade duty with the appellant nor any act of suppression. Accordingly, the Department was not entitled to invoke the extended period of limitation. The law is settled that duty recoverable for a period not exceeding one year in the absence of any element of deception or malpractice is not sustainable. The show cause notice in the given circumstances is held to be barred by time. For the similar reason, there is nothing on record which entitles imposition of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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