Job-work exemption and notice-bound demands cannot fail when supplier obligations and unalleged Modvat issues are used against the assessee.

A job worker could not be denied the benefit of Notification No. 214/86-C.E. because the notification's undertakings and duty-related obligations were cast on the raw-material supplier, not on the job worker; non-compliance by the supplier could not defeat the exemption. An alleged simultaneous availment of SSI exemption under Notification No. 175/86-C.E. and Modvat credit also could not support demand or penalty where that allegation was absent from the show cause notice, and the findings travelled beyond its scope. The impugned order was therefore set aside and consequential relief followed.

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Issues: (i) Whether a job worker could be denied the benefit of Notification No. 214/86-C.E. for non-compliance with the notification conditions by the supplier of raw materials. (ii) Whether the alleged simultaneous availment of SSI exemption under Notification No. 175/86-C.E. and Modvat credit, in the absence of a specific show cause notice allegation, could sustain the demand and penalty.

Issue (i): Whether a job worker could be denied the benefit of Notification No. 214/86-C.E. for non-compliance with the notification conditions by the supplier of raw materials.

Analysis: The notification placed the obligation to furnish undertaking, produce evidence of use, and accept responsibility for duty on the supplier of the raw materials, not on the job worker. The goods were received from suppliers, processed on job work basis, and returned to those suppliers. Any failure to satisfy the procedural requirements contemplated by the notification was attributable to the suppliers. The job worker, who was not required to give the undertaking under the notification, could not be denied the exemption for the supplier's omission.

Conclusion: The benefit of Notification No. 214/86-C.E. could not be denied to the appellant job worker.

Issue (ii): Whether the alleged simultaneous availment of SSI exemption under Notification No. 175/86-C.E. and Modvat credit, in the absence of a specific show cause notice allegation, could sustain the demand and penalty.

Analysis: The allegation of simultaneous availment was not part of the show cause notice, and the authorities below travelled beyond its scope in basing findings on that ground. In any event, the goods involved were different and the cited legal position permitted SSI exemption and Modvat credit to operate simultaneously in respect of different goods. On the facts, no valid charge survived on this ground.

Conclusion: The demand and penalty could not be sustained on the basis of alleged simultaneous availment.

Final Conclusion: The impugned order was set aside and the appeal was allowed with consequential relief.

Ratio Decidendi: A job worker cannot be denied a job-work exemption when the statutory conditions are cast on the raw-material supplier, and findings outside the scope of the show cause notice cannot sustain duty demand or penalty.

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