TMI Blog2020 (6) TMI 752X X X X Extracts X X X X X X X X Extracts X X X X ..... will go against the assessee. So, there is no scope for the Notification to be read as exempted from duty except the value addition , when the notification exempts from the whole of duty . From the facts recorded in the impugned orders, it cannot be concluded whether the assessee appellant has operated under the Notification No. 214/1986-C.E., dated 25-3-1986 or otherwise. The assessee appellant also claimed that they have operated under Rule 4(5) of CCR, 2004. It is not clear as to whether this rule was used for some other consignments. If the assessee s claim is that they have operated both under Notification No. 214/1986-C.E., dated 25-3-1986 and also under Rule 4(5) of CCR, 2004, it is not clear the provision under which they could have done so - The taxable event is the critical factor while determining whether a tax is leviable or otherwise. The taxable event in the case of Excise duty is the manufacture, in case of sales tax, it is the act of selling, in case of Customs it is the act of import or export, in case of Income Tax, it is the act of earning income, etc. There is no tax with value addition as the taxable event. There is indeed value addition in the economy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main manufacturer subject to some conditions indicated therein. It is the case of the appellant that they have also operated under Rule 4(5) of CCR, 2004. The aforesaid notification reads as under : Notification No. 214/86-C.E., dated 25-3-1986 Exemption to specified items if manufactured in a factory as a job work and used in the manufacture of final products In exercise of the powers conferred by sub-section (1) of section 5A of the Central Excise Act, 1944 (1 of 1944), read with sub-section (3) of section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957), (hereinafter referred to as Special Importance Act), the Central Government, being satisfied that it is necessary in the public interest so to do hereby exempts goods specified in column (1) of the Table hereto annexed (hereinafter referred to as the said goods ) manufactured in a factory as a job work and :- (a) used in relation to the manufacture of final products, specified in column (3) of the said Table, - (i) on which duty of Excise is leviable in whole or in part; or (ii) for removal to a unit in a free trade zone or to a hundred per cent, export-o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his factory without payment of duty - (i) under bond for export; or (ii) for removal to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or for supply to the United Nations or an international organisation for their official use or for supply to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 108/95-Central Excises, dated the 28th August, 1995, or (iii) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVA T Credit Rules, 2002; or (c) removed on payment of duty for home consumption from his factory; or (d) used in the manufacture of goods of the description specified in column (1) of the Table hereto annexed by another job worker for further use in any of the manner provided in clauses (a), (b) and (c) as above. (ii) the said supplier produces evidence that the said goods have been used or removed in the manner prescribed ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se as to on what part of the value they would pay duty and on what part they would not. It is his assertion that Section 4 of Central Excise Act as well as Central Excise (Valuation) Rules, nowhere provide for the appellant to pay duty only on the value addition . Therefore, the demands have been correctly confirmed and need to be upheld. 7. After hearing both sides and perusing the records, we find that the crux of the matter is whether the appellant has operated under Notification No. 214/1986-C.E., dated 25-3-1986 as asserted by the assessee or not operated under it, as asserted by the department. This fact needs to be ascertained. It may be ascertained by examining the records and returns of the appellant and whether they have received the goods and transferred them to the principal manufacturers and whether the principal manufacturer has given an undertaking as required and whether the principal manufacturer has discharged duty thereof. If these and other conditions are fulfilled and the appellant had indeed operated under Notification No. 214/1986-C.E., dated 25-3-1986, then the appellant is not required to discharge any Excise duty at all. There is no scope for dischargi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y is leviable on it and Excise duty is leviable only on the manufacture. The measure of tax is the next question to be considered. The measure of tax in case of Excise duty is determined by Section 4 of the Central Excise Act, Central Excise Valuation Rules, 2000 and the Central Excise Tariff. We find that neither Section 4 nor the Central Excise Valuation Rules have any provision under which Excise duty can be levied on the manufacturer only to the extent of his value addition . We, prima-facie, do not find any basis for such a scheme of operation by the assessee appellant. 11. However, in order to avoid cascading effect of the taxes, certain relief by way of set off has been provided in the form of CENVAT Credit whereby the manufacturer is allowed to take credit of the duty paid on the inputs or input services and use it to pay duty which they are required to pay on the final products. This, of course, does not give the manufacturer an option to say that he will not take credit of the inputs or input services and will calculate the amount of value addition and pay Excise duty only on such value addition. Nothing in the Central Excise Act or Valuation Rules provide for such an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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