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TMI Blog2023 (7) TMI 49X X X X Extracts X X X X X X X X Extracts X X X X ..... ively as well. The appellants have also filed cross objections in the impugned matter. 2. Briefly stated the facts of the case are that the respondents are manufacturers of Stainless steel cold rolled patta/ patti falling under Tariff heading 7219 9090 of the Central Excise Tariff Act, 1985 [The Tariff Act]. They were paying the duty on the finished goods manufactured by them by cold rolling process with the aid of cold rolling machines in terms of Rule 15 of the Central Excise Rules, 2002 [The Rules] read with Notification No. 17/2007-CE dated 01.03.2007. The compounded duty at compounded rates in terms of said notification was fixed based on the number of cold rolling machines installed and used for manufacture. Respondents accordingly, were not availing the cenvat credit on the goods so used in the manufacture and input services utilized thereto, during the period October 2014 to 30.06.2017 as provided under Rule 15 ibid. 2.1 It is the case of the Department that during the aforestated period the respondents cleared stainless steel circles falling under chapter heading 7222 40 20 of the First Schedule of the Central Excise Tariff Act, 1985, without payment of central excise du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e cover of their own invoices. 3. The learned Commissioner however, did not find any merit in the plea of the Department that the respondent as principal manufacturer were liable to pay duty on the finished goods (SS circles/ scrap) cleared by the respondents under the cover of their own invoices. It is an undisputed fact on record that while the respondents were sending stainless steel Patties or Pattas for job work under the cover of challans receiving the goods as stainless steel circles along with stainless steel scrap and were clearing them under their own invoices they had filed no declaration with the department for availment of job work benefit in terms of Notification No. 214/86-CE dated 25.03.1986. Declaration as may be applicable for removal of goods for job work under Rule 16A of the Central Excise Rules, 2002 [The Rules] was also not filed by the assessee-respondents. The Department, however had therefore, alleged suppression and mis-declaration on part of the respondent and had thereby invoked extended period of limitation. 4. Contrary to above, the respondent-assessee claims to be the manufacturers of stainless steel circles and stainless steel scrap under Compound ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Notification No.214/86-CE, whereby only it can be decided that who would pay duty on the goods manufactured on job work. Since they did not file the undertaking and the alleged goods i.e. circles and scrap were manufactured by their Job workers, therefore the job workers were the manufacturer, hence they were not liable to pay duty as demanded. The assessee also pleaded that they were not under any obligation to follow the said procedure of the Notification No. 214/86-CE as the goods cleared from their factory for job work were already duty paid and neither Cenvat Credit had been taken by them nor the SS Patta-Patti were removed under Rule 4(5)(a) of Cenvat Credit Rules, 2004. The assessee also raised question about classification of S.S. Circles and pleaded that circle cutting is not a process of manufacture. The assessee has referred to the Notification No. 12/2012-CE dated 17.03.2012 and claimed that under S.No. 203 of the said Notification, the process of cutting SS Patta Patti into circles is anyway exempted from payment of Central Excise duty. In addition to this the assessee also raised the issue of limitation, cum tax value and imposition of equal penalty as proposed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we do not find any merit in these appeals and dismiss the same with costs." 6.2 Learned Commissioner therefore, concluded as under:- "From the above judgment of Apex court, it is clear that condition laid down in the notification viz. undertaking by the supplier of raw materials or semi-finished goods is must to cast duty liability on the raw material supplier. It is not in doubt that the circles were manufactured by the job worker and the duty liability as per Central Excise laws is only on the manufacturer. The duty liability can be shifted to the supplier of raw materials or semi- finished goods only if the supplier gives an undertaking in terms of the notification. This is a substantive condition which cannot be taken as a procedural condition, as it shifts the duty liability from the job worker to the supplier of raw materials or semi-finished goods. Until and unless this condition of giving undertaking is fulfilled, the duty liability cannot be shifted on the supplier of raw materials or semi-finished goods, as they were not the manufacturer of circles as well as scrap arising during the manufacture of circles." 6.3 Learned Commissioner agreeing with the contentions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required for the manufacture of stainless steel Patta-Patti, therefore, they were under no obligation to ensure duty payment on goods manufactured by the job worker. The learned Commissioner, also dismissed reliance of the Revenue on certain case laws cited in support of their contention, as the goods were mainly removed by the supplier of raw material, on which Cenvat credit had not been availed by the supplier. For sake of greater clarity, the analysis undertaken by the learned Commissioner in the following cases is enumerated herein: 1. M/s Moon Chemicals Vs CCE, Thiruvananthanpuram [2007(215) ELT434 (Tri-Chennai)] : In this case, the Hon'ble Tribunal observed that "the appellants have claimed that the Sodium Silicate Solution returned after job work to their customer was removed by the latter on payment of duty for home consumption from their foctory. This claim has not been contested by the Revenue. In the circumstances, the appellants were eligible for the benefit of the Notification subject to the surviving condition that the raw materialsupplier gave an undertaking to the Asst. Commissioner or Deputy Commissioner of Central Excise having jurisdiction over the appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m under the provisions of Rule 57F(4) of the Central Excise Rules, 1944. 2. The provisions of Rule 57F(4), a manufacturer can get the job work done on his inputs or on partially processed inputs in terms of the provisions of Rule 57F(4) of the Central Excise Rules, 1944. In such cases, duty liability is required to be discharged by the manufacturer and not by the job workers. Accordingly job worker is not eligible to avail credit in such cases." 7. Learned Commissioner, therefore, arrived at a categorical finding that the charges made out were not sustainable and therefore, held no discussions on the question regarding limitation, cum -tax-value, exemption to the job worker under Notification No. 12/2012-CE dated 17.03.2012 (S No. 203). These, therefore, were not taken up for consideration by him. 8. Learned Authorised Representative for the Revenue, Shri Sanjay Kumar Singh, vehemently argued in support of Revenue and placed heavy reliance in the case of Moon Chemicals (supra) to fasten onto the respondents the leviability of the duty as the principal manufacturer. 8.1 We however, find that the aforesaid decision of this Tribunal in the case of Moon Chemicals does not come t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supplier of raw materials or semi- finished goods- (i) on payment of duty for home consumption (on which duty of excise is leviable whether in whole or in part); or (ii) without payment of duty under bond for export; or (iia) by a manufacturer of dutiable and exempted final products, after discharging his obligation in respect of said goods under rule 6 of the CENVAT Credit Rules, 2002; or (iii) without payment of duty to a unit in a Special Economic 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 supply to the United Nations or an international organisation for their official use or 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, from the whole of the duty of excise leviable thereon, which is specified in the First Schedule and the Second Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), the additional duty of excise leviable thereon, which is specified in the Schedule to the said Sp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tariff Act, 1985 (5 of 1986), other polyester filament yarn falling under heading 5402 and tariff item 5406 00 10, light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol. All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than matches. 11. The Notification clearly states that said notification can be rendered applicable only in respect of goods for which the supplier has furnished an undertaking to the department/ jurisdictional authorities of the job workers. In the case of Kartar Rolling Mills vs CCE [2006 (197) ELT 151 (SC)] discussed supra, the benefit of exemption from duty to the job worker was denied essentially as no undertaking was filed by the principal. It is common knowledge that the responsibility in the central excise statute is on the manufacturer for payment of duty on the manufacture of finished goods which could either be a principal manufacturer or the job worker and in the event of finished goods produced by the job worker in the normal course the said job worker would be deemed to be the manufacturer. Also for entitlement of the availment of exemption notification, it is imperative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nied by the department have no bearing to the impugned question for consideration in the present appeal. 13. In so far as this Tribunal's decision in the case of Poduval Industries vs Commissioner of Central Excise and Customs & Service Tax, Cochin [2018 (362) ELT 149 (Tri-Bang)] is concerned, it cannot be construed to be an order strictly on merits of the facts of the case, in as much as evident from paragraph 4 of the order, it appears to be a case of fait accompli and not based on sound legal tenets and discussions. The said paragraph is reproduced herein below: "4. To protect the interest of the Revenue, the duty will have to be paid by someone. In the instant case, the appellant is the principal and by not giving the undertaking, the appellant has developed a system to evade payment of Central Excise duty. By connivance of two parties, sovereign function of payment of duty cannot be avoided. In the instant case, the principal and the job worker with a conspiracy as stated above have made an attempt to evade the payment of duty. They tried to take advantage of the technicality of the law." 13.1 The said matter, therefore appears to have been decided on technicalities and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve the job worker from payment of duty the principal manufacturer has to own the liability to pay such duty. It is only by virtue of the Notification No. 214/86-C.E., dated 25-3-1986 that the liability of the job worker to pay duty is transferred to the principal manufacturer who undertakes to pay duty. 7.7 The intention of enactment of Notification (supra) was to shift the liability of payment of duty from job worker to the principal manufacturer under certain conditions as provided in the said notification. There is no blanket machinery provisions in the Central Excise law under which the liability to pay duty is transferred from the job work manufacturer to another person i.e. principal manufacturer. However when the principal manufacturer does not own up the liability to pay duty on finished goods, the provision of Notification No. 214/86-C.E., dated 25-3-1986 does not apply. In that case, it is the ultimate manufacturer i.e. the job worker who has to pay the duty. Following the procedure and conditions of the Notification (supra) only by the principal manufacturer, the job worker would be saved from payment of duty on goods manufactured by him. 7.8 In the case under refe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to be used by the principal manufacturer either in the manufacture of goods on which duty was paid by him or were to be cleared as such on payment of duty. The said situation given in Rule (supra) cannot be equated with the present situation as Rule 4(5)(a) not being concerned with payment of duty but only limited to sending of cenvated inputs to the job worker. 7.10 In the present case the fact remains is that neither the goods after job work were cleared as such on payment of duty nor were used in manufacture of dutiable final products by the principal manufacturer. Hence the duty liability would be on the real manufacturer of goods i.e. the job worker. Since the principal manufacturer pays the duty on the product arising out of manufacture even at the job worker's end, he is eligible to avail credit. The Rule 4(5)(a) thus is a facility to the principal manufacturer to send goods for job work on which Cenvat has been availed. It is nothing to do with the duty payment of goods. 7.11 Rule 4(6) is a facility to the principal manufacturer to clear the goods directly from the premises of job worker after payment of duty. Notably it is not the case of the appellant that the pri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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