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TMI Blog2023 (11) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... ine part on job work basis for M/s Rockman Industries Ltd. and took job work charges @ Rs 11 or 11.60% and paid service tax thereon. The Revenue was of the view that the process of conversion of Metal into Engine Components involved excisable goods and this manufacture/production of goods does not constitute a taxable service as defined under the Finance Act, 1994 because such manufacture or production falls under the Negative List as defined under section 66 D (f) of the Finance Act, 1994 and, therefore, the service tax paid by the appellant was not applicable on the job work charges. 3. In order to avail the exemption from payment of duty under job work Notification No. 214/1986-CE dated 25.03.1986, the goods manufactured at the end of principal manufacturer using the goods manufactured by the appellant were required to undergo payment of duty or if such goods are sold as such the duty must be paid on such goods. The principal manufacturer - M/s Rockman Industries Ltd. were availing area exemption under Notification No. 50/2003 - CE dated 10.06.20003 and, therefore, were not paying central excise duty on their final products. Since the principal manufacturer was exempted from pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on the decision of the Rajasthan High Court and also of this Tribunal to say that cenvat credit is permissible on the basis of debit notes. Lastly, according to them extended period of limitation cannot be invoked as there is no suppression on their part. 8. The Revenue relied on the findings of the Authorities below and according to them from the process involved, it is clear that the appellant was manufacturing Pressure Die Component from Aluminium, which amounts to manufacture and were, therefore, liable to pay excise duty. They also referred to the non-compliance of the condition of the job work exemption notification in the present case and in support thereof relied on the decisions laying down the principles for construction of exemption notification. On the issue of cenvat credit, the learned Authorised Representative for the Revenue referred to the findings that the debit notes are not the specified document as per Rule 9, therefore, no benefit of cenvat credit can be allowed to the appellant. 9. The following two issues arise for our consideration : "(i) whether the process of conversion of metal into Engine Components carried out by the appellant amounts to manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter availing cenvat facility provided under the CCR, 2004. II- Secondly, they were also manufacturing pressure die components from Aluminium supplied by M/s Rockman on job work basis." Taking into account the above two types of transactions, it is sufficient to hold that the process undertaken by the appellant amounts to manufacture and that is why he was paying excise duty when he was selling the same product to other companies. This also nullifies the contention of the appellant that the goods manufactured are not marketable just because they are unfinished. In fact, the Larger Bench in Thermax Babcock & Wilcox Ltd V Commissioner of C.EX., Pune, 2018 (364) ELT 945,decided the issue whether the job worker was liable to pay duty on intermediate manufacture of parts of boiler against the party. 11. Having come to the conclusion that the Die Casting of Components from Aluminium after finishing through machines results in manufacture, the necessary corollary will be that the appellant is liable to pay excise duty and not service tax. The provisions of section 66D of the Finance Act, 1994 provides for negative list and says : "66D The negative list shall comprise of the follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... einafter 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 (2) 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-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 organization 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) for removal under bond for export, or (b) cleared as such from the factory of the 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 (iii) without payment of duty to a unit in a free trade zone or to a hundred per cent. Export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process. Explanation II shall be omitted. (vide Notification No. 33/2000-C.E., dated 31-3-2000) Description of Inputs Description of final product (1) (2) All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than 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 the following, namely :- (i) matches; (ii) fabrics of cotton or man-made fibres falling under Chapter 52, Chapter 54 or Chapter 55 of the First Schedule to the said Act; (iii) fabrics of cotton or man-made fibres falling under Heading Nos. 58.01, 58.02, 58.06 (other than goods falling under sub-heading No. 5806.20), 60.01 or 60.02 (other than goods falling under sub-heading No. 6002.10) of the First Schedule to the said Act." The Notification No 214/86 has been the subject matter of interpretation in various decisions of the Tribunal as well as of the Supreme Court. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vided 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." 13. We may now consider whether in the facts of the present case, the appellant is entitled to the benefit of the exemption notification. The principal manufacturer- M/s Rockman issued challan under Rule 4 (5) (a) of the CCR, 2004 for the purpose of delivery of the material at the factory premises of the appellant for undertaking job work of complete manufacturing. The agreement between the appellant with M/s. Rockman Industries for manufacture of goods on job work basis, particularly Clause 6 says : "6-R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ingredients to attract the provisions of Section 11 AC are attracted, the discretion to quantify the amount of penalty ends and in view thereof, the Adjudicating Authority has rightly imposed the penalty equal to the duty amount. Similarly, interest under Section 11AA has also been rightly imposed as the appellant knowingly and deliberately evaded payment of excise duty. 15. The second issue as to whether the appellant is entitled to take cenvat credit on the strength of debit notes, which is not the document prescribed under Rule 9(1) of the CCR, 2004 to avail the cenvat credit, is no longer res-integra and has been decided by the High Court of Rajasthan in the case of Commissioner of Central Excise, Jaipur -1 Vs. Bharti Hexacom Ltd, 2018 (360) ELT 515. The Division Bench decided the issue after considering the long line of decisions, where same issue was considered and decided infavour of the party and against the Revenue. The various decisions as cited are:- 1. Karur KCP Packaging Pvt. Ltd.,vs. Commissioner -2009 (16) STR 609 (Tribunal). 2. Commissioner vs. Grasim Industries Ltd., 2011 (24) STR 691 (Tribunal). 3. VSL Steels Ltd., vs. Commissioner 2013 (295) ELT 725 ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... envatable documents. 17. We are fully bound by the law laid down in these decisions and particularly the decision of the Rajasthan High Court in Bharti Hexacom (supra), which seems to have been accepted by the Revenue as no appeal seems to have been filed challenging the same. In the light of the law laid-down, we may now examine the facts of the present case. The learned Counsel for the appellant had filed the supplementary paper book on 3rd June 2022, where at Serial No.4, he has annexed the copies of the debit notes along with the chart showing the details of the debit notes. On perusal of the debit notes, we find that they contain all the particulars and details, as are required to be mentioned in the invoice to avail the cenvat credit. Consequently, the appellant is entitled to claim the cenvat credit and the Authorities below have erred in denying the same. Both the Adjudicating Authority as well as the Appellate Authority have rejected the claim for cenvat credit on the ground that the debit notes were not a proper document as prescribed under Rule 9 of CCR, 2004 for availing cenvat credit and, therefore, did not examine the particulars given therein in terms of Rule 4A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest and penalty is not sustainable. 19. The appellant has raised the issue of revenue neutrality referring to a latest decision of this Tribunal in M/s Parvatiya Plywood Pvt. Ltd. Vs. Commissioner of Customs, Central Excise and Service Tax, Meerut-II - Final Order Nos.51158-51167/2022 dated 08.12.2022, where the explanation added in section 4(1) after clause (b) of the Act (w.e.f.) 14.05.2003 was considered to say that where excise duty have not been collected separately by the manufacturerseller, the price charged shall be treated as cum-duty, excluding the sales tax and other taxes, if any actually paid. We therefore, remand the matter to the Adjudicating Authority to re-compute the duty liability in terms thereof and determine the actual duty liability of the appellant. 20. The period in dispute is from February 2015 to March 2016. Since the show Cause Notice has been issued on 28.4.2017, the delay as pointed out by the Department is of merely two months, i.e. February and March, which also, in the facts of the case, as discussed above, are covered by virtue of the extended period of limitation. 21. In view of our discussion above, we are of the view that the appellant is l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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