Job-work liability under excise rules is independent of Notification No. 214/86-C.E.; duty demand was unsustainable.

Rule 57F(4) of the Central Excise Rules, 1944, and its successor under Rule 4(5)(a) of the Cenvat Credit Rules, operate independently of Notification No. 214/86-C.E. A job worker processing goods received from a principal manufacturer and returning them after processing cannot be fastened with central excise duty merely because the goods are not covered by that notification. The notification does not control or restrict the separate legal effect of the job-work rule. On that basis, the demand of duty, interest and penalty against the job worker was held unsustainable.

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Issues: Whether a job worker clearing goods received from the principal manufacturer under the relevant job-work provisions can be fastened with central excise duty merely because the goods are not covered by Notification No. 214/86-C.E.

Analysis: The Tribunal held that the relevant job-work provision, namely Rule 57F(4) of the Central Excise Rules, 1944 and its pari materia successor under Rule 4(5)(a) of the Cenvat Credit Rules, operates independently of Notification No. 214/86-C.E. Where the goods are received from the principal manufacturer and are returned after processing, duty cannot be demanded from the job worker merely on the ground that the goods are not specifically included in the notification. The cited precedents were applied to hold that the notification does not control or restrict the separate legal effect of the job-work rule.

Conclusion: The demand of duty, interest, and penalty against the job worker was unsustainable and the appeal succeeded.

Ratio Decidendi: Liability of a job worker cannot be imposed where the processing is done on goods received from the principal manufacturer and returned after processing under the independent job-work rule, even if the goods are outside the scope of the relevant exemption notification.

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