2015 (9) TMI 1526 - AT - Central Excise

Manufacturer not Job Worker Liable for Duty: Tribunal Decision Upheld

The Tribunal dismissed the Revenue's appeal, upholding the order favoring the respondent. It ruled that duty liability rests with the principal ... Benefit of Rule 57F of the CER, 1944 - job work - manufacture of Texturised Polyester Filament Yarn falling under CTH 5402 of CETA, 1985 - denial on the ground that the exemption from duty on dye Texturised Polyester Filament Yarn was not available under N/N. 214/86-C.E. ibid - Held that: - As per C.B.E. & C. Circular No. 306/22/97-CX., dated 20-3-1997, the duty liability is on the manufacturer not on the job worker. If the supplier has not reversed 10% of the Cenvat credit on the inputs, it is the supplier to be asked to reverse the same, not the respondent. Moreover, the duty liability is to suffered on the final product by the principal manufacturer not on the job worker i.e. the respondent - the provision of Rule 57F(4) of Central Excise Rules, 1944 are squarely to be applicable to the facts of this case - the respondent is not liable to pay any duty - appeal dismissed - decided against Revenue. Issues involved:Revenue's appeal against the benefit of Rule 57F of the Central Excise Rules, 1944 allowed to the respondent by the learned Commissioner (Appeals).Detailed Analysis:1. Benefit of Rule 57F and Notification No. 214/86-C.E.:The respondent, engaged in dyeing Texturised Polyester Filament Yarn on job work basis, received a show cause notice for duty demand on the dyed yarn. The Revenue contended that the exemption under Notification No. 214/86-C.E. was not applicable, and the respondent failed to comply with Rule 57F requirements. The learned AR argued that duty should be paid by the respondent due to non-compliance. However, the respondent's counsel cited Rule 57F(4) and C.B.E. & C. Circular No. 306/22/97-CX to support their position that duty liability rests with the principal manufacturer, not the job worker. The Tribunal upheld the impugned order, stating that the duty liability is on the manufacturer, not the job worker, and the respondent was not required to pay any duty.2. Applicability of Rule 57F(4) and Circular No. 306/22/97-CX:The Tribunal analyzed the job work scenario where the respondent received inputs from the principal manufacturer for dyeing and returned the processed goods. Referring to Circular No. 306/22/97-CX, it was established that the duty liability lies with the manufacturer, not the job worker. The Circular clarified that in such cases, duty liability must be discharged by the manufacturer, and the job worker is not eligible for credit. Therefore, the Tribunal concluded that the respondent was not liable to pay duty based on the provisions of Rule 57F(4) and the circular.3. Final Decision:After considering the arguments from both sides, the Tribunal dismissed the Revenue's appeal, upholding the impugned order that favored the respondent. The Tribunal emphasized that the duty liability is on the principal manufacturer as per Rule 57F(4) and Circular No. 306/22/97-CX, absolving the respondent from duty payment obligations. Consequently, the respondent was not required to pay any duty on the dyed Texturised Polyester Filament Yarn, and the impugned order was upheld.This detailed analysis of the judgment highlights the key legal arguments, provisions, and conclusions reached by the Appellate Tribunal CESTAT NEW DELHI in the case concerning the benefit of Rule 57F of the Central Excise Rules, 1944 granted to the respondent by the learned Commissioner (Appeals).