Liability to pay excise duty was on job-worker for Unloading Chemicals from tankers, repacking & labelling In Small Drums

Dow Chemical International Pvt. Ltd. Vs C.C.E.-Kutch (CESTAT Ahmedabad)

Conclusion: Since the job worker had carried out all the activities which, as per the department, amounted to manufacturing therefore, the job worker was alone to pay the excise duty.

Held: Assessee submitted that the activity carried out by the job worker was unloading of chemicals of Chapter 29 from the tanker and converting them into small drums. On the drums, the label was pasted and it was cleared by issuing the invoice of the registered dealer. The activity was trading and could not be considered manufacturing in order to attract excise duty. Since there were judgments wherein it was held that the transferring of chemicals from tankers to small drums could not be said to be a conversion from bulk pack to retail pack and labeling/relabeling did not render the product marketable. Therefore, merely putting a label on the tanker could not be said to have made the activity for marketing of the product. Assessee contended that if at all the activity was treated as manufacturing, even then, the appellant was not liable to pay the excise duty on the ground that the entire activity was undertaken by the job worker. Therefore, the job worker became the manufacturer for whom the duty demand could not be made on the appellant. The issue raised was whether the activity of unloading of chemicals from the tankers and re-packing and labelling in small drums by the job workers amounted to manufacture and was liable to excise duty. It was held that that irrespective of the ownership of goods whoever undertook the manufacturing activity he had to pay the duty. Applying the ratio of the Larger Bench in the present case since, the job worker had carried out all the activities which as per the department amounted to manufacture, the job worker was alone to pay the excise duty, therefore, the duty demand raised against assessee was not sustainable, hence, the same was liable to be set aside.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

The issue involved in the present case is that whether the activity of unloading of chemicals of Chapter 29 from the tankers and re-packing and labeled in small drums by the job workers is amount to manufacture and liable to Excise duty or otherwise. If at all the activities amount to manufacture whether the appellant being a principal supplier is liable to pay duty or the job worker is liable to pay the demand.

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