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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the job worker who carried out dyeing on inputs supplied by the principal manufacturer was liable to pay excise duty, or whether the duty liability rested on the principal manufacturer under Rule 57F(4) of the Central Excise Rules, 1944 and the applicable departmental circular.
Analysis: The goods were received by the respondent for job work and were returned after the processing was completed. The governing circular clarified that, in such cases, the manufacturer who sends the inputs for job work bears the duty liability and the job worker is not the person required to discharge it. The fact that the supplier had not reversed the specified credit did not shift the liability to the respondent, since that obligation lay on the supplier or principal manufacturer. On these facts, the job-work arrangement fell within the scope of Rule 57F(4), and the exemption framework was not to be denied to fasten duty on the job worker.
Conclusion: The respondent was not liable to pay duty, and the order dropping the demand was in law.
Final Conclusion: The duty demand against the job worker could not be sustained because the statutory liability attached to the principal manufacturer, not to the respondent.
Ratio Decidendi: In a job-work arrangement covered by Rule 57F(4), excise duty liability falls on the principal manufacturer and not on the job worker, who merely processes the supplied inputs and returns the finished goods.
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