TMI Blog2000 (1) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... , 1985. The Department's further case is that the said clearances are not covered by any exemption notification relating to job workers such as Notification No. 214/86. As such, the processes engaged in by the appellants as job workers were chargeable to basic excise duty of 12% ad valorem and additional duty of excise at the rate of 8% ad valorem. 3.The matter was adjudicated by the Commissioner who by the impugned order dated 27-11-1997 confirmed the duty demand. This appeal is against the said order. 4.The Commissioner rejected the contention of the present appellants that since they had received the fabrics as such or as partly processed fabrics under Rule 57F(3)/57F(4) from the principal manufacturers for job work, they were not liable to pay any duty. Commissioner held that Rule 57F only stipulated that the manufacturer may remove the inputs for carrying out any operation necessary for the manufacture of final product and return the same to his factory for further use in the manufacture of final product and that the said rule nowhere granted any exemption to job workers for clearing the processed goods by them without payment of duty. He further held that for granting exe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s without payment of duty under bond for export clearly implied that the job worker would not have paid duty at the time of removal of the processed goods from his premises to the factory of the principal manufacturer. Therefore, a combined reading of Rule 57F (4)(ii) and (iii) would conclusively show that when the main Rule 57F (4) refers to the return of the goods to the factory of the principal manufacturer, it evidently refers to return of the goods without payment of duty. He also derives support for the said proposition from the provisions of Rule 57F(6), (7) and (9). He draws attention to Rule 57(6) requiring the input to be removed by the principal manufacturer on payment of an amount equivalent to 10% of the value of the input against removal challan. Likewise, under Rule 57F(7), the manufacturers can take credit on the processed input received back by him on the strength of the triplicate copy of the challan. Again, as per Rule 57F(9), credit can be taken back by the principal manufacturer only when the input is received under the cover of duplicate copy of the challan of the manufacturer. Rule 57F(9) does not require issue of invoice or gate pass under Rule 52A by the jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... both sides. We observe from the scheme of Rule 57F(4) that it deals with a situation where the manufacturer of the final products has to remove the inputs to a place outside his factory for carrying out testing, repairing etc. which are necessary for the manufacture of final products or for the manufacture of intermediate products. The inputs so removed have to be returned to the factory of manufacturer of the final products within a period of 60 days or any extended period allowed by the Asst. Collector. Further, the removal of the inputs to a place outside the factory of the manufacturer of the final products can be only for purposes of further use in the manufacture of the final product or for removing them after payment of duty for home consumption or for removing the same for export on payment of duty under bond. Moreover, conditions in sub-rule (4) to Rule 57F also do not talk of any removal by a job worker without payment of duty. In other words, the scheme of Rule 57F, in our view, does not deal with the situation of job worker removing the inputs or raw materials received from the principal manufacturer for purposes of carrying out any manufacturing process as a job worke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellant - manufacturers of the commodity. For this proposition, the adjudicating authority has relied on tribunal's judgment in Facit Asia v. Collector [1991 (54) E.L.T. 347]. The said authority has held that the Notification 214/86-CE, applicable to intermediate goods produced by the job-workers as in this case - is not applicable to the processed fabric simply because the said commodity does not figure in the relevant column pertaining to 'final product' of the table to the notification. 12.Learned Advocate has assailed the aforesaid findings of the adjudicating authority. His submission is that Rule 57F(2)(d) as was considered by Tribunal in Facit Asia was in terms different from the corresponding provisions in Rule 57F(4) applicable in the present case. In order to appreciate the plea of the learned Advocate, Shri V. Sridharan, I reproduce the provisions of Rule 57F(2) considered in Facit Asia and the relevant extracts of Rule 57F(4) now applicable :- "4. The point that arises for determination is whether the appellants can be taken to have complied with the requirement of Rule 57F(2) and are eligible for Modvat credit on the inputs which were removed from the factory and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner of Central Excise may allow in this behalf, for- (i) further use in the manufacture of the final product; or (ii) removing after payment of duty for home consumption; or (iii) removing the same without payment of duty under bond for export." It is apparent, submits the learned Advocate, that the intermediate product manufactured by the job-worker out of inputs received under Rule 57F(4) procedure are to be returned to the Modvat assessee for three purposes:- (i) for further use in manufacture of final product. (ii) for removal on payment of duty for home consumption. (iii) for export in bond without payment of duty. 13.If duty is paid by the job-worker on the product manufactured by him, there was no question of spelling out the purpose listed at (ii) above. If the contention of Revenue is accepted, purpose of removal of product manufactured by, and received from job-worker at the hands of the Modvat assessee on payment of duty for home-consumption becomes redundant. It is obvious duty cannot be charged twice - once at the hands of the job worker and again at the hands of the Modvat assessee - on the same goods. Rule 57F(2) considered in Facit Asia, was not so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing under Rule 57F (4), because it is not disputed by the appellants that Notification 214/86-CE is not applicable to the goods in question,. He places reliance on Facit Asia (supra) as also on Bright Steel Mac Fabrics [1994 (69) E.L.T. 276] relying on Facit Asia. 16.In my considered view, there is substantial force in the submission of the learned Advocate for the appellant. Additional clause (ii) in Rule 57F (4) (corresponding to erstwhile Rule 57F (2) considered in Facit Asia), by necessary implication means that duty liability on goods manufactured by a job-worker, out of inputs (as it is or partially processed) on which Modvat credit had been taken by Modvat assessee and removed under Rule 57F (4) has to be discharged by the Modvat assessee and not the job-worker. If we do not accept this interpretation, we would be rendering the said clause (ii) superfluous inasmuch as duty cannot be charged twice over on the same goods-once by the job workers and again by the Modvat assessee. Observation in Facit Asia, on which the adjudicating authority relies, are no longer valid in view of the provisions of clause (ii) of Rule 57F (4). 17.I also hold that the observations in Facit Asi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts and circumstances of the case, the appellant, a job worker and receiving inputs under challans issued under Rule 57F(4), as it existed during the relevant period, and returning the goods after carrying out the job-work undertaken by him to its customers from whom such inputs were received, is required to pay duty on such goods. In view of the difference of opinion, the matter may be2. referred to third Member with the approval of the Hon'ble President. Sd/- (P.C. Jain) Vice President Sd/- (A.C.C. Unni) Member (J) [Order per :23. P.G. Chacko, Member (J)]. - The appellants were job-workers engaged in the process of heat setting and stentering of fabrics falling under Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985. They had received fabrics under cover of challan issued under Rule 57F (3) till 28-2-1997 and thereafter under Rule 57F (4) of the Central Excise Rules, 1944 from various manufacturers of man-made fabrics (hereinafter referred to as 'the principal manufacturers') for subjecting the same to heat setting and stentering on job work basis. They had returned the goods so heat set and stentered in their factory, to the principal manufacturers wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pondent/Revenue. Having so heard both the sides and perused the orders recorded by both the Members of the Bench which heard the matter earlier, I observe that all the arguments advanced before that Bench by the learned Advocate and the learned SDR, as recorded in the orders of the learned Members of the Bench, have been reiterated before me. This being so, it is not necessary for me to reproduce such arguments either. 26.The issue before me is one squarely involving the interpretation of the provisions of Rule 57F in general and those of sub-rule (4) in particular. Rule 57F deals with the manner of utilisation of the inputs and the credit allowed in respect of duty paid thereon. Sub-rule (1) provides that the inputs on which credit has been taken, may be used in or in relation to the manufacture of final products. Sub-rule (2) provides that such inputs may be removed for home consumption or for export under bond, after intimation in writing to the jurisdictional Assistant Commissioner of Central Excise. Sub-rule (3) provides that the removal of the inputs for home consumption shall be made under cover of Rule 52A invoices and on payment of duty equal to the amount of credit take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rule (4) expressly provides for removal of the goods without payment of duty at the end of the principal manufacturers for export under bond, clause (i) of the sub-rule enables the principal manufacturers to use the said goods in the manufacture of their final products. There is no warrant, in my view, to presume that the return of the processed goods by the job workers to the principal manufacturers against payment of job work charges under sub-rule (4) ibid should be accompanied by payment of Central Excise duty at the job workers' end. If it were to be presumed that the job workers should pay Central Excise duty on the processed (heat-set and stentered) fabrics at the time of returning the goods to the principal manufacturers who had supplied unprocessed fabrics for such processing, it would mean that the same goods should suffer duty once again at the hands of the principal manufacturers, if the latter were to remove the goods for home consumption vide clause (ii) of sub-rule (4) ibid. But, as rightly held by the learned Vice President in his dissenting order, there cannot be double taxation on the same goods under the Central Excise Act. Therefore, I think, without the ordeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entering of fabric amounted to 'manufacture' within the meaning of this term under Section 2(f) of the Central Excise Act. He has attempted to draw support for this submission from the decision of the Hon'ble Supreme Court in the case of Bombay Oil Industries Private Limited v. Union of India [1995 (77) E.L.T. 32 (S.C.)] and has drawn my attention, particularly, to Para 10 of the Apex Court's judgement. But, I observe, the question which was considered by the Apex Court in the said Para 10 was whether Notification No.168/78 dated 2-9-1978 issued under Section 25(1) of the Customs Act, 1962 was clarificatory to the earlier Notification No.141/76 dated 2-8-1976. I do not find anything in the said Para 10 of the Apex Court's judgement to support the Revenue's case instantly. The learned DR has further taken my attention to two other decisions of the Apex Court, namely, (i) Novopan India Limited v. Collector of Central Excise and Customs, Hyderabad [1994 (73) E.L.T. 769 (S.C.) and (ii) Liberty Oil Mills Private Limited v. CCE, Bombay [1995 (75) E.L.T. 13 (S.C.)]. Both these decisions of the Apex Court were to the effect that any ambiguity or doubt in an exemption provision should be re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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