Job-work duty liability rests with the raw material supplier under the notification, not the job-worker, where undertaking was filed.

Job work performed under a notification that places duty liability on the raw material supplier could not be used to fasten duty on the job-worker where the supplier had filed a categorical undertaking to bear that liability. On those facts, the revenue was required to recover any duty payable from the supplier, not from the assessee, and the absence of independent action against the supplier was material. The procedural objection based on alleged non-compliance with the notification did not change the allocation of liability in the case, and the demand against the assessee was unsustainable.

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Issues: Whether the value of clearances attributable to job work done for another unit was liable to be included in the assessee's turnover so as to deny the benefit of the small scale exemption, and whether duty, if any, was recoverable from the assessee or from the supplier of raw material under the relevant job-work notification.

Analysis: The assessee carried out job work for another concern that had filed an undertaking with the jurisdictional authority stating that the goods would be manufactured on job-work basis and that any duty liability arising thereon would be discharged by it. The notification governing such job work made the supplier of raw material the person from whom duty was recoverable where duty became payable on goods manufactured under the notification. On those facts, the absence of independent action against the supplier and the existence of a categorical undertaking meant that the revenue could not fasten the duty demand on the assessee. The procedural objection based on non-compliance with the notification did not alter the allocation of liability in the facts of the case.

Conclusion: The demand against the assessee was unsustainable and the appeal was allowed.

Ratio Decidendi: Where job work is undertaken under a notification and the raw material supplier has given the required undertaking to bear the duty liability, any duty payable under the notification is recoverable from the supplier and not from the job-worker.

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