Duty-free clearance to a job worker upheld where permission continued under the successor excise regime and the assessee's own unit qualified.

Permission for duty-free clearance of processed yarn to a job worker was treated as continuing under the successor excise regime, and the assessee's own unit could function as the job worker for the permitted processing and return of goods. The Tribunal accepted the contemporaneous correspondence and the jurisdictional Assistant Commissioner's permission, and found that the department had not displaced the assessee's claim. It also held that the movement of yarn and fabric between the two units was covered by the relevant notifications. On that basis, duty-free removal to the assessee's own factory was upheld and the departmental objection for want of permission failed.

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Issues: Whether the assessee was entitled to remove processed yarn without payment of duty to its own factory at Cuddalore on the strength of the permission granted by the jurisdictional Assistant Commissioner and the notifications governing clearance to a job worker.

Analysis: The permission dated 29.03.2001 for clearance of yarn without payment of duty to job workers was placed on record, and the assessee's contemporaneous correspondence showed that the earlier permission granted under Rule 13 of the Central Excise Rules, 1944 was being continued under Rule 19 of the Central Excise Rules, 2001. The Tribunal found that the department had not disputed the grant of permission in a manner that displaced the assessee's claim. It also accepted that the movement of yarn and fabric between the two units was covered by the relevant notifications and that an assessee's own unit could function as a job worker for this purpose.

Conclusion: The assessee was entitled to clear processed yarn without payment of duty to its own factory during the dispute period, and the department's objection on absence of permission failed.

Final Conclusion: The appeals were allowed and the assessee succeeded on the central issue of duty-free removal of yarn under the applicable excise permissions and notifications.

Ratio Decidendi: Where permission for duty-free clearance to a job worker is granted and continued under the successor excise regime, the assessee's own unit may be treated as the job worker for the permitted processing and return of goods.

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