Double duty demand on job-worked goods was not supportable where the principal unit had already paid duty under compounded levy.

Duty could not be demanded again from a job worker where aluminium circles were processed on job-work basis for a principal unit already paying duty under the compounded levy scheme. The principal unit was permitted to engage job workers for part of its manufacturing activity, and the same goods were subsequently cleared on duty payment by that unit. On these facts, the second demand against the job worker was not supportable at the prima facie stage, and the view that the principal unit had to seek abatement was also found untenable. The appellants were therefore entitled to waiver of pre-deposit and stay of recovery of duty and penalty.

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Issues: Whether the appellants were entitled to waiver of pre-deposit and stay of recovery of duty and penalty on the job-worked aluminium circles, where duty on the same goods had already been paid by the principal unit under the compounded levy scheme.

Analysis: The dispute arose from duty demanded on aluminium circles manufactured through job work between two adjacent units run by brothers. One unit was operating under the compounded levy scheme and was entitled under the relevant notification to engage job workers for part of its manufacturing activity. The cold-rolling work was carried out by the appellant on job-work basis, but the goods were thereafter processed and cleared by the principal unit on payment of duty under the compounded levy scheme. On these facts, the demand again raised on the appellant for the same goods was not supportable at the prima facie stage. The view that the principal unit had to seek abatement was also found unsustainable, since duty liability under the compounded levy scheme had already been discharged.

Conclusion: The appellants were entitled to waiver of pre-deposit and stay of recovery of the duty and penalty amounts.

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