2003 (8) TMI 264 - AT - Central Excise

Appellate tribunal rules duty on manufacturing job workers, not trading company

The appellate tribunal dismissed the appeal, holding that duty, if applicable, should be collected from the job workers conducting the manufacturing ... Conversion of incomplete article into a complete finished article - manufacture - job worker liability - place of manufactureJob worker liability - place of manufacture - manufacture - Whether the respondent (Globe Auto Agency) was liable to pay duty where the finishing processes on unfinished motor-cycle parts were carried out by other firms/job workers and not at the respondent's premises. - HELD THAT: - The notice itself recorded that discrete processes (cutting of pipes, moulding, powder coating or electroplating) were carried out by separate entities - Globe Accessories, Globe Trading Corporation and Globe Enterprises - and that after these processes the goods were returned to the respondent only for checking and packing before despatch. The adjudicating authority made no finding, and the notice contained no allegation, that those firms were the same as the respondent. In those circumstances the Tribunal concluded that the operations giving rise to the finishing of the unfinished articles took place at the premises of those third parties and not at the respondent's premises. Therefore, if duty became payable by reason of conversion of an unfinished article into a finished article, liability would lie on the person(s) who actually undertook those processes and not on the respondent who only received the finished goods for checking and packing. [Paras 3]The respondent is not liable to pay duty on the basis that the finishing processes were carried out by other firms/job workers; any duty, if payable, would be recoverable from those persons.Final Conclusion: The appeal by the Commissioner is dismissed; the Tribunal upheld the Commissioner (Appeals) finding that the respondent is not liable for duty where the finishing operations were performed by other firms/job workers and not by the respondent. The appellate tribunal dismissed the appeal where a trading company was engaged in finishing parts of motor vehicles through job workers. The tribunal ruled that duty, if payable, should be recovered from the job workers who carried out the manufacturing processes, not the trading company.