Case Law Details
Paras Founders & Engineers Vs C.C.E. (CESTAT Ahmedabad)
The recent order from the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Ahmedabad sheds light on an oversight regarding the Small Scale Industries (SSI) exemption. In the case of Paras Founders & Engineers vs. C.C.E.-Ahmedabad-I, the appellant, engaged in casting on job work and self-manufacture, faced a demand for excise duty. The contention arose from the principal manufacturer’s failure to account for job work goods. The tribunal, acknowledging procedural nuances and the SSI exemption, has directed a re-adjudication of the matter.
Detailed Analysis:
The appellant, involved in casting on a job work basis and self-manufacture, found themselves subject to an excise duty demand. The principal manufacturer, M/s. Dyna Tex Enterprise, supplied pig iron for casting, and the appellant, as a job worker, processed the raw material based on the designs provided by the principal.
The crux of the department’s argument was that the appellant should be liable for excise duty since the principal manufacturer did not account for the job work goods in their records. The appellant countered, citing procedural frameworks such as Notification No 214/86 and Notifications No 83/94 and 84/94. They emphasized that duty liability, if any, rested with the principal manufacturer.
The tribunal noted that necessary declarations and undertakings had been submitted by the principal manufacturer under the relevant notifications. This crucial documentation placed the duty liability on the principal manufacturer, shielding the appellant from direct responsibility.
Moreover, the appellant followed proper procedures, receiving raw materials and returning processed goods using prescribed challans. Despite the principal manufacturer’s potential lapses in accounting, the tribunal held that the appellant, as a job worker, couldn’t be held responsible.
In addressing goods manufactured by the appellant for their own use, the tribunal acknowledged the SSI exemption under Notification No 08/2003. The appellant argued that after deducting the value of job work goods, the remaining value fell within the SSI threshold, making it exempt from duty. This aspect also warranted verification.
Conclusion:
The CESTAT Ahmedabad, recognizing the oversight in the SSI exemption and procedural adherence by the appellant, set aside the impugned order. The case has been remanded for re-adjudication to ensure a thorough examination of duty liability concerning job work and the appellant’s self-manufactured goods. This decision underscores the importance of procedural compliance and the need for a nuanced approach in excise duty matters.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The brief facts of the case is that the appellant are engaged in the manufacture of casting on job work basis as well as on their own. One of the principal manufacturers M/s. Dyna Tex Enterprise have been supplying pig iron (raw material) to the appellant for manufacture of castings as per drawings and designs given by the principal manufacturer and the appellant have undertaken the job work. The case of the department is that since the principal manufacturer has not accounted for the job work goods manufactured and supplied by them, the appellant is liable to pay excise duty on the casting manufactured by them. Accordingly, the show cause notice was issued and demand of excise duty was confirmed. The Learned Commissioner (Appeals) in an appeal filed by the appellant also upheld the duty demand. Therefore, the present appeal.
2. Shri Nirav Shah, learned Counsel appearing on behalf of the appellant submits that the job work was done under the procedure of Notification No 214/86 dated 25.03.1986 and also under Notification No 83/94 and 84/94 dated 11.04.1994 according to which the appellant is not liable to pay any duty on the job work goods. He also referred to the declaration/ undertaking given in this regard by the principal manufacturer to their jurisdictional Central Excise officer. He submits that all the movement of the goods from principal manufacturer to the job worker and the return of job work good to the principal manufacturer were taken place under proper prescribed challan, therefore, merely because the principal manufacturer have not accounted for properly the goods in their books and cleared the goods clandestinely, the appellant being job worker cannot be made responsible and no duty can be charged from the appellant.
2.1. He further submits that in the entire process the principal manufacturer is liable to pay duty if at all any duty is payable and during the investigation the principal manufacturer have discharged the excise duty. For this reason also no duty against the appellant shall sustain. He also submits that the appellant has processed the castings which is intermediate goods, hence, the same is not marketable. For this reason also duty is not payable by the appellant. In this regard he placed reliance on the following Judgments:-
- M/s. White Machines – 2008(224) ELT 347
- M/s. Shalimar Wire India Ltd – 2009 (318) ELT 615
- M/s. Wheel & Axle Plant – 2005 (189) ELT 316
2.2 He submits that there is the duty demand on the goods manufactured on their own which is other than job work goods. It is his submission that after reducing the total turnover on job work, the aggregate value of the clearance of their own goods is very meagre and the same is covered under the SSI exemption under Notification No. 08/2003 dated 01.03.2003.
3. Shri Ajay Kumar Samota, Learned Counsel appearing on behalf of the Revenue reiterates the finding of the impugned order.
4. We have carefully considered the submission made by both sides and perused the records. We find that as per the documents referred by learned counsel, it is observed that the principal manufacturer M/s. Dyna Tex Enterprise has submitted necessary declaration / undertaking required under Notification No 214/86- CE and/ or Notification No 83/94 and 84/94- CE. Under the said notification the duty liability, if any arises, the same is recoverable from the principal manufacturer who has supplied the raw material to the job worker.
4.1. It is also observed that the appellant have been receiving the goods under the job work challan and also clearing the processed goods under the subsidiary challan meant for job work goods. On this basis also no duty can be demanded from the appellant. However all the relevant documents needs to be verified to extend any benefit to the appellant.
4.2. As regard the goods which is other than job work and cleared by the appellant on their own without issuing invoices, there is a force in the argument of the appellant that after deducting the value of job work goods if the value remains within the threshold limit of the SSI exemption under Notification No 08/2003 dated 01.03.2003 then the same will not liable to duty. However, this aspect also needs to be verified on the basis of the facts.
5. Accordingly, we are of the view that the entire matter needs to be re- considered on the basis of our above observation. Hence, the impugned order is set aside. Appeal is allowed by way of remand to the adjudicating authority.
(Pronounced in the open court on 03.11.2023)
