Substance over form in central excise: job-worker arrangement treated as one concern, with SSI exemption restored on remand.

Substance over form was applied to treat the respondent and its job worker as one arrangement for central excise purposes, because invoices and delivery challans stood in the respondent's name and the record showed common interest in manufacture and clearance. On those facts, the respondent was not regarded as a mere trader and was liable to be treated as a manufacturer for duty purposes. The text also states that Notification No. 8/2003-C.E. dated 01.03.2003 was available on the facts, the registration-related objection was rejected, and the matter was remanded for fresh computation of duty after allowing the exemption and hearing the respondent.

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Issues: (i) whether the respondent and the job worker were in substance one and the same concern so that the respondent was liable as manufacturer for central excise duty on the clearances; (ii) whether, if duty liability existed, the respondent was entitled to the benefit of Notification No. 8/2003-C.E. dated 01.03.2003 and consequential re-adjudication.

Issue (i): whether the respondent and the job worker were in substance one and the same concern so that the respondent was liable as manufacturer for central excise duty on the clearances.

Analysis: The findings recorded in the original adjudication were accepted as showing that the invoices and delivery challans were issued in the respondent's name, the goods were cleared through an arrangement that lacked distinct identities, and the record indicated common interest in manufacture and clearance. On those facts, the respondent could not be treated as a mere trader, and the authorities below were right in treating the structure as one designed to evade duty. The decisions relied upon by the respondent were held to be distinguishable on facts.

Conclusion: The respondent was liable to be treated as a manufacturer and could not escape central excise duty on the premise that the job worker was a separate and independent unit.

Issue (ii): whether, if duty liability existed, the respondent was entitled to the benefit of Notification No. 8/2003-C.E. dated 01.03.2003 and consequential re-adjudication.

Analysis: The respondent's plea for SSI exemption was accepted in principle, since the notification was held to be available on the facts stated and did not impose the registration-related condition relied on by the department. The matter therefore required fresh computation of duty after giving effect to the exemption and providing an opportunity of hearing.

Conclusion: The respondent was entitled to the benefit of Notification No. 8/2003-C.E. dated 01.03.2003, and the case was remanded for fresh adjudication on duty liability.

Final Conclusion: The duty demand was not finally quantified at this stage, but the respondent's status as manufacturer was affirmed and the matter was sent back for fresh adjudication after extending the exemption benefit.

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