2018 (2) TMI 2095 - AT - Central Excise

Appellant's Duty Liability Upheld for Diesel Generating Sets Covers

The tribunal upheld the duty liability on the appellant for diesel generating sets' body covers, dismissing the appeal against Order-in-Appeal No. ... Liability of principal manufacturer for excise duty on job-worked goods - undertaking by principal for payment of duty - evasion of duty by collusion between principal and job-worker - protection of revenue and responsibility for payment of dutyLiability of principal manufacturer for excise duty on job-worked goods - undertaking by principal for payment of duty - Appellant held liable as principal manufacturer for duty on acoustic enclosures received on job-work basis where neither principal nor job-worker paid duty and no undertaking was given by the principal. - HELD THAT: - The Tribunal found that the appellant, as the principal, received acoustic enclosures manufactured by a job worker and made regular payments to that job worker. The appellant did not give any undertaking to assume responsibility for payment of duty; the job worker likewise did not discharge the duty. Given that the obligation to pay excise duty in respect of the goods could not be left unsatisfied, the Tribunal treated the principal as liable for the duty. The finding rests on the role of the appellant as principal and the absence of any undertaking or payment by the job worker, which justified sustaining the demand against the appellant. [Paras 3]Demand for duty sustained against the appellant as principal manufacturer.Evasion of duty by collusion between principal and job-worker - protection of revenue and responsibility for payment of duty - Conduct of the appellant and the job worker characterised as a collusive attempt to evade payment of duty, warranting upholding of the impugned order. - HELD THAT: - The Tribunal concluded that by not giving an undertaking and by the job worker's failure to pay duty, the appellant had adopted a system which effectively sought to evade Central Excise duty. The Tribunal described the arrangement as a conspiracy between the principal and the job worker to take advantage of a technicality and avoid the sovereign obligation to pay duty. On that basis, and to protect the revenue, the Tribunal found no infirmity in the demand and sustained the impugned order. [Paras 4, 5]Findings of evasion/collusion accepted and impugned order sustained.Final Conclusion: The appeal is dismissed; the Tribunal sustained the demand for excise duty against the appellant for the period 1-4-2000 to 4-6-2002, holding the principal liable and characterising the arrangement with the job worker as an attempt to evade duty. Issues:- Duty liability on the appellant for diesel generating sets' body cover- Responsibility for payment of Central Excise duty in job work scenario- Alleged evasion of duty payment through connivance of principal and job workerAnalysis:The appeal was filed against Order-in-Appeal No. 106/2007, concerning the duty liability of the appellant for the period from 1-4-2000 to 4-6-2002. The appellant, engaged in manufacturing Diesel Generating sets, used Acoustic Enclosures as body covers from M/s. SBN Engineering Works on a job work basis. Despite no duty payment by either the appellant or the job worker, the demand was confirmed against the appellant, the principal manufacturer, as per the records. The appellant contested the demand, leading to the present appeal.During the hearing, it was established that the appellant received the acoustic enclosures from M/s. SBN Engineering Works, the job worker, at the appellant's request. Regular payments were made by the appellant to the job worker, but no duty undertaking was given by the appellant. Similarly, the job worker did not pay the duty as well. The tribunal noted that in such scenarios, someone must bear the duty liability to protect the Revenue's interest. The appellant, as the principal, was found to have devised a system to evade duty payment by not assuming responsibility, leading to an attempt to avoid payment through a conspiracy between the principal and the job worker.Ultimately, the tribunal upheld the impugned order, citing no flaws and sustaining it along with the provided reasons. The appeal filed by the appellant was consequently dismissed, affirming the duty liability on the appellant for the diesel generating sets' body covers. The judgment was delivered on 6-2-2018 in open court.