Job worker exemption under Notification 214/86-CE upheld where departmental registration and undertaking conditions were not breached.

A job worker claiming exemption under Notification No. 214/86-CE could rely on the undertaking furnished by the main manufacturer to the jurisdictional officer, and was not required to make further enquiries where the department itself had issued central excise registration to that supplier. Mere allegation that the supplier had no factory of its own did not justify denial of the exemption, especially when there was no allegation that the undertaking conditions were breached, the goods were misused, or revenue loss occurred. On those facts, the duty demand and consequential penalties were unsustainable, and the exemption was available.

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Issues: Whether the appellant, a job worker, was entitled to exemption under Notification No. 214/86-CE dated 25.03.1986 and whether duty demand and penalties could be sustained merely because the supplier was alleged to have no factory of its own.

Analysis: The exemption was claimed on the basis of an undertaking given by the main manufacturer to the jurisdictional officer. The only objection raised was that the supplier had allegedly no factory, though the department had itself issued central excise registration to that supplier and there was no allegation that the undertaking conditions were violated, that the goods were not used or cleared as prescribed, or that any revenue loss had occurred. In these circumstances, the job worker could not be expected to make further enquiries beyond the registration and undertaking issued by the department. The demand of duty and the consequential penalties were therefore unsustainable.

Conclusion: The appellant was entitled to the exemption, and the duty demand and penalties were set aside.

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