Job-work duty liability under Notification 214/86-CE is limited to the normal period absent suppression and penalty fails.

In a job-work arrangement under Notification No. 214/86-CE, the Tribunal treated the job worker as liable to central excise duty on the clearances because the goods had not suffered duty at either the job worker's or the principal manufacturer's end. However, where the department was already aware of the arrangement, the declarations, and the audit findings, no suppression of facts was found and the extended limitation period was unavailable. The demand was therefore confined to the normal period, and penalty was held unsustainable on the facts.

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Issues: (i) Whether the job worker could be fastened with central excise duty for clearances made under Notification No. 214/86-CE when the principal manufacturer had undertaken responsibility to discharge duty. (ii) Whether, in the absence of suppression of facts, the demand could extend beyond the normal period and whether penalty was sustainable.

Issue (i): Whether the job worker could be fastened with central excise duty for clearances made under Notification No. 214/86-CE when the principal manufacturer had undertaken responsibility to discharge duty.

Analysis: The arrangement was one of job work under the notification, and the declaration filed by the principal manufacturer showed an undertaking to discharge duty liability on the final product. However, the goods cleared from the job worker's premises did not suffer duty either at the hands of the job worker or the principal manufacturer. On that basis, the Tribunal treated the appellant as liable to duty for the relevant clearances, but only to the extent permitted by limitation.

Conclusion: The appellant was held liable to central excise duty on the job-work clearances, but only for the normal period.

Issue (ii): Whether, in the absence of suppression of facts, the demand could extend beyond the normal period and whether penalty was sustainable.

Analysis: The Tribunal found that the Revenue was aware throughout of the job-work arrangement, the declarations under the notification, and the departmental audit findings. As there was no concealment or suppression by the appellant, the extended period was not available. The duty demand was therefore confined to the preceding one year from the date of the show-cause notice, and the penalty was held to be unwarranted in the facts of the case.

Conclusion: The demand beyond the normal period was barred, and the penalty was set aside.

Final Conclusion: The duty liability was sustained only for the normal limitation period, while the penalty did not survive.

Ratio Decidendi: Where the department is aware of the material facts and there is no suppression by the assessee, the demand can be raised only for the normal limitation period and penalty is not justified.

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