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TMI Blog2023 (5) TMI 802X X X X Extracts X X X X X X X X Extracts X X X X ..... Original No. 35/CE/UDR/2018-19-Jt.Commr. dated 28.02.2019. 1.2. The respondent M/s Sonex Marbles Pvt. Ltd. [hereinafter referred to as the assessees] was engaged in sawing marble blocks on job work basis for various parties. They were maintaining job work ledger and issuing job work invoice for the same. Raw material suppliers were sending the marble blocks directly to the assessees. It was noted that the assessees did not maintain any kind of record for goods sent or received for job work. 1.3. It was also noted that none of the suppliers had filed any declaration before the Deputy/Assistant Commissioner of Central Excise having jurisdiction over the factory of the job worker that the said goods shall be used in or in relation to the manufacture of the final products in his factory or removed without payment of duty from his factory in certain cases or removed on payment of duty for home consumption from his factory or used in manufacture of goods by another job worker in terms of Notification No. 214/86-CE or Notification No. 84/94-CE dated 11.04.94 as amended. 1.4. The excise duty is on "manufacturing" and the duty liability arises when the goods are manufactured. The process ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acturers for use of such goods manufactured by the respondent on job workers in his factory and payment of duty on the same. ii) None of the supplier of raw material worked under job work procedure of Central Excise and these suppliers neither operated under Rule 4(5)(a) of Cenvat Credit Rules, 2004 nor ever undertook the responsibility of using such goods manufactured by others on job work basis in further manufacturing of dutiable goods or to discharge duty liability on such goods in terms Notification No. 83/94-CE, 84/94-CE or 214/86-CE as the case may be, as no declaration/ undertaking under above said notifications were filed by the principal manufacturer. Hence, the requirement of the Notification was not complied. Therefore, the assessees as an independent manufacturer was liable to pay Central Excise duty on the marble slabs manufactured by him on job work basis. The benefit of the small-scale exemption was denied as value of the clearances exceeded the prescribed limit. iii) Valuation of the goods manufactured by the Appellant on job work basis was required to be worked out in terms of Rule 10A(ii) of the Central Excise Valuation (Determination of Price of Excisable Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... turnover for the purpose of calculating turnover of Rs.150 Lakhs or Rs.400 Lakhs, the export turnover, exempted (non- excisable) turnover, trading turnover has been included. Similarly, duty on such turnover has also been calculated which was legally wrong. (g) the duty has been wrongly calculated because effective duty cannot exceed the duty prescribed by Central Excise Tariff i.e. duty calculated by Tariff. (h) the entire demand was time barred therefore the demand under Section 11(4) of CEA,1944 and penalty under Section 11AC of the CEA, 1944 has been wrongly confirmed/imposed(ix) the penalty @100% of duty amount has been wrongly imposed for the period upto 14.05.2015. (i) The appellant did not have the capacity and required machinery for polishing and other process in their unit and have done the job work of only sawing of rough green marble blocks into slabs. Court below have erred in calculating duty on the sale price of finished marble slabs (after polishing, edging repairing by epoxy resin application on cracks, netting, grading packing, trimming, buffing, colouring etc.) (j) The principal manufacturers for whom the appellant did job work, have further processed mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasonable means consistent with the principle and general provision of the Rules and Section 4(1) of the Act. Thus, in view of the ruling of the Apex court in Ujagar Prints, in the facts of the present case, valuation should be cost of raw material+job charges. 4. Aggrieved by the decision of Commissioner (A), the Department filed the present appeals on following grounds: 5. The Commissioner (Appeals) was pleased to allow the appeals of the respondent assessees on his findings that- the assessees have returned all the goods to the principal manufacture(s) after job work, who further processed the same before sale. The principal manufacturer were not required to file declaration under job work exemption Notification No. 83/94-CE, as marble block are not excisable. Secondly, if principal manufacturer did not follow the procedure prescribed under Notification No. 83-/94-CE, duty liability lies on them and not on the assessees- job worker. The Commissioner (Appeals) also held that there is error in valuation adopted by revenue, as the assessees cleared rough marble slabs whereas the price adopted for valuation was clearly with respect to finished and polished marble slabs. 5.1. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... than the domestic market as various risks are involved like money, transportations, etc. Further observed that as regards quantity of marble slabs manufactured on job work basis, no consideration has been made for uneven corners, cracks etc. which are discounted in the trade by way of trade practice. 7. It was further observed that some of the Principal manufacturers including one M/s Kailash, Udaipur in their declaration sent to the department, confirmed that they undertake further processing after receiving the marble slabs from the job worker, which is valued about Rs. 6 per Square feet. Thus, the net price or value of job work will be (Rs. 24-6) or Rs. 18 per square ft. Thus, the value adopted by revenue for calculation of turnover is erroneous and not tenable. Further observed that the method of valuation adopted by revenue is contrary to Board circular No. 619/10/2002-CX dated 19.02.2002, where it have been made clear that the value of goods cleared by job worker will be intrinsic value of same/similar like goods, cleared from the premises of the job worker. Thus, revenue have erred in not taking the value of goods in the condition it is cleared by the job worker. It was fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... giving an option by the assessees in this regard. Thus, the Adjudicating Authority has erred in observing that the assessees did not opt to pay duty at tariff rate. 11. It was further observed that the assessees have rightly discharged the duty in terms of provision of Section 5A(3) and duty cannot be demanded in terms of Notification No. 4/2006-CE dated 01/03/2006, as the same exceeds the duty leviable as per tariff rate which is the statutory duty and thus demand is not sustainable. 12. Aggrieved by the decision of the Commissioner (Appeals) the Department filed the instant appeal on following grounds : 12.1 Notification No. 83/94-C.E., allows exemption to the goods manufactured on job work from whole of the duty of excise leviable, subject to the condition that the supplier of the raw materials or semifinished goods gives an undertaking to the proper officer having jurisdiction over the factory of the job worker. 12.2 The process undertaken on job work i.e. sawing of marble blocks into marble slabs amounts to manufacture and that a new article having a distinctive character or use has emerged from the said process. The job worker would be liable to pay duty of excise on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on No.83/94-CE dated 11.04.1994. ii) Neither Notification Nos. 214/1986 nor 83/94 -Ce cast liability to pay duty on respondent job worker, since goods manufactured have been sent to the principal manufacturer, they were liable for duty as above notification cast responsibility on them. iii) Principal manufacturers are working under Small Scale exemption hence, are not liable to pay duty. iv) The adjudicating authority did not discuss the declaration filed by 23 principal manufacturers. v) Value adopted for duty liability was not correct. vi) Learned Commissioner (Appeals) had elaborately discussed all the issues and held that the respondent was not liable to pay duty, thus the impugned order is required to be upheld and appeals filed by revenue deserves to be rejected. vii) Respondent relied upon some decisions relating to the issue in support of his contention. 14. Sh. O.P. Bisht , the learned Authorised Representative appearing for the department supported the findings of the adjudicating authority and further submitted that:- 14.1. Since, none of the supplier of raw material worked under job work procedure of Central Excise and these suppliers neither operated unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r consideration are the following: - 16.1 Whether duty liability is of the job worker who actually manufactured the goods or the supplier of the inputs, unless the raw material supplier undertakes the responsibility of paying duty as per provisions of Notification No. Notification No. 83/94-CE, 84/94-CE or 214/86-CE. 16.2 Whether respondent was covered by the exemption Notification No. 83/94-CE, 84/94-CE or 214/86-CEand, therefore, entitled to the exemption from payment of excise duty. 16.3 Wrong availment of benefit of SSI exemption Notification No. 08/2003-CE dated 01.03.2003. and Notification No. 83/94-CE, 84/94- CE or 214/86-CE. resulting non-payment of duty on goods manufactured by the respondents as job worker. 16.4 Whether duty have been rightly calculated. 16.5 Whether the extended period of limitation is invokable in the facts and circumstances of the case: and 16.6 Whether appellant is liable for penalty for the contraventions of the provision of law. 17. We observe that Note (6) of the SECTION V of CHAPTER 25 of Central Excise Tariff Act,1985, in relation to products of headings 2515 and 2516, specifies that the process of cutting or sawing or sizing or any other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incipal to principal basis. 17.3 From the facts on record, we find that the respondent assessees have done the job work of sawing the green marble blocks and cleared the same as such (without finishing, polishing etc.) to the principal manufacturers. It is the principal manufacturers who also have established units for processing of marble who have done the further process of finishing, polishing etc. and thereafter cleared the goods from their premises. Thus, we find that though the respondent assessees is liable to pay excise duty on the job work goods, we find that such duty have been wrongly calculated both with respect to the quantum of clearance and also the calculation of duty, as have been rightly observed by learned Commissioner (Appeals). Such observations have not been disputed by revenue. 18. We find that in the case of M/s Kartar Rolling Mills, [2006 (197) ELT 151 (SC)] the Supreme Court has held that unless there is an undertaking by the principal manufacturer that they would discharge the duty liability, the job worker is liable to discharge duty on the clearances from the premises of job worker. The Tribunal in the case of ETERNIT EVEREST LTD, versus COMMISSIONER ..... X X X X Extracts X X X X X X X X Extracts X X X X
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