Job work clearances, small scale exemption and limitation: proof of sale and suppression are essential before excise demand can stand.

Goods sent for recovery of tartaric acid on job-work terms, with only job charges paid and no proof of sale consideration, are not treated as sales, so no excise duty arises on those clearances. An assessee's own sales may qualify for small scale exemption, and clearances of separate private limited companies are not to be clubbed where each company is a distinct manufacturer for exemption purposes. Where the Department knew the nature of the clearances and the transactions were made with departmental permission, the extended period of limitation is not available absent suppression or other statutory grounds.

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Issues: (i) Whether the movement of L-2 ABT to the assessee and return of recovered tartaric acid was a sale transaction or only job work, and whether duty was leviable on such clearances; (ii) whether tartaric acid sold by the assessee on its own account was entitled to small scale exemption and whether clearances could be clubbed with another private limited company; (iii) whether the extended period of limitation was available to the Department.

Issue (i): Whether the movement of L-2 ABT to the assessee and return of recovered tartaric acid was a sale transaction or only job work, and whether duty was leviable on such clearances.

Analysis: The Tribunal applied the Supreme Court's remand directions and examined whether the materials showed any transfer of L-2 ABT for consideration as a sale. The record showed that permission had been taken to send L-2 ABT for recovery of tartaric acid, that the assessee received only job charges, and that no sale invoices or other consideration for sale were proved. The Department did not produce material to establish that the transactions were sales rather than job work and recovery.

Conclusion: The transactions were held to be only job work and return of recovered material, so no duty was leviable on those clearances.

Issue (ii): Whether tartaric acid sold by the assessee on its own account was entitled to small scale exemption and whether clearances could be clubbed with another private limited company.

Analysis: The Tribunal found that the assessee's own sales were separate from the job-work clearances and that the adjudicating authority had correctly granted the benefit of the small scale exemption. The circular relied upon by the assessee treated each limited company as a distinct manufacturer for exemption purposes, and the cited Supreme Court authority supported non-clubbing of clearances of separate private limited companies for exemption limit purposes.

Conclusion: The assessee was entitled to the small scale exemption on its own sales, and clubbing of clearances was not warranted.

Issue (iii): Whether the extended period of limitation was available to the Department.

Analysis: The Tribunal noted that the facts and the nature of the clearances had been known to the Department and that the transactions were carried out after obtaining departmental permission. In that background, the ingredients necessary for invoking the extended period were not established.

Conclusion: The extended period of limitation was not available to the Department.

Final Conclusion: The duty demands were unsustainable both on the alleged job-work clearances and on the assessee's own sales, and the Department's appeals failed in full.

Ratio Decidendi: Where goods are sent for job work with recovery and return of the processed material for job charges, without proof of sale for consideration, the transaction is not a sale and no excise duty can be demanded on that basis; separate private limited companies are distinct entities for small scale exemption, and the extended limitation cannot be invoked absent suppression or other statutory grounds.

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