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:-
