Job work under Cenvat credit rules does not shift excise duty liability to the processor when goods return to the principal manufacturer.

In a recognised job work arrangement under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, where iron ore was processed into iron ore concentrate slurry for return to the principal manufacturer, the duty liability was held not to shift to the job worker merely because the activity amounted to manufacture. The analysis applied earlier circulars and precedents under the predecessor Rule 57(F)(4) to confirm that, in such arrangements, the principal manufacturer remains liable for central excise duty. The appellant was therefore not liable to pay duty as the job worker.

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Issues: Whether the appellant, acting as a job worker and processing iron ore into iron ore concentrate slurry under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 for return to the principal manufacturer, was liable to pay central excise duty on the processed goods.

Analysis: The arrangement was treated as job work undertaken for the sister unit, and the earlier circular and precedents on the predecessor provision under Rule 57(F)(4) of the Central Excise Rules, 1944 were found to govern the liability question. The language of Rule 4(5)(a) was held not to justify a different duty position for the job worker merely because the activity amounted to manufacture. The principle accepted in prior decisions was that, in such job work arrangements, duty liability rests with the principal manufacturer and not the job worker.

Conclusion: The appellant was not liable to pay duty as a job worker under Rule 4(5)(a) of the Cenvat Credit Rules, 2004.

Ratio Decidendi: In a recognised job work arrangement where inputs are sent to and returned from the job worker under the Cenvat credit framework, duty liability is not fastened on the job worker merely because the processing amounts to manufacture; the principal manufacturer remains liable.

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