Job-work duty liability and SSI aggregation exclusions were resolved in favour of the assessee.

Rule 4(5)(a) of the Cenvat Credit Rules, 2002 allows inputs or partly processed goods to be sent to a job worker for further processing, and duty liability in that arrangement rests on the raw material supplier rather than the job worker. Non-compliance with Notification No. 214/86 by the supplier did not justify fastening duty on the job worker, so the demand was unsustainable. Para 3A(b) of Notification No. 8/2003-C.E. excludes clearances bearing another person's brand name from SSI aggregation where applicable. Goods cleared under the supplier's brand name were therefore not includible in the assessee's aggregate value, and the related duty demand, interest, and penalty could not survive.

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Issues: (i) Whether duty could be demanded from the job worker for manufacture undertaken on job-work basis when inputs were sent under Rule 4(5)(a) of the Cenvat Credit Rules, 2002 and the procedure under Notification No. 214/86 was not followed. (ii) Whether the value of clearances of goods bearing the brand name of another person was includible in the aggregate value for SSI exemption under Notification No. 8/2003-C.E.

Issue (i): Whether duty could be demanded from the job worker for manufacture undertaken on job-work basis when inputs were sent under Rule 4(5)(a) of the Cenvat Credit Rules, 2002 and the procedure under Notification No. 214/86 was not followed.

Analysis: Rule 4(5)(a) permits inputs or partially processed goods to be sent to a job worker for further processing and contemplates their return within the prescribed period. The liability to discharge duty in such a situation was held to rest on the raw material supplier and not on the job worker. Since the duty demand was founded only on non-compliance with Notification No. 214/86 by the supplier, the demand against the appellant could not be sustained.

Conclusion: The duty demand on this count was unsustainable and was set aside in favour of the assessee.

Issue (ii): Whether the value of clearances of goods bearing the brand name of another person was includible in the aggregate value for SSI exemption under Notification No. 8/2003-C.E.

Analysis: Para 3A(b) of the notification excludes clearances bearing the brand name or trade name of another person from the aggregate value for home-consumption clearances, where the provision applies. The manufactured goods bore the brand name of the supplier, and the notification did not permit inclusion of such clearances in the appellant's aggregate turnover for SSI computation. On that basis, the SSI denial and the resulting demand could not stand.

Conclusion: The value of such clearances was not includible and the demand on this count was set aside in favour of the assessee.

Final Conclusion: The entire duty demand failed, and the connected levy of penalty and interest also could not survive; the appeal succeeded with consequential relief.

Ratio Decidendi: Where goods are sent for job work under the Cenvat credit regime, duty cannot be fastened on the job worker merely for non-observance of the supplier's notification procedure, and clearances bearing another person's brand name are excluded from SSI aggregation when the exemption notification so provides.

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