Substantial compliance under job-work exemption saved the job worker from duty and interest when the principal later paid duty.

Substantial compliance with Notification No. 214/86-CE protected the job worker where inputs were received under Rule 57F(4) challans, the processed goods were returned to the principal manufacturer, and the required declaration had been filed. Although the principal manufacturer did not pay duty at the time of clearance, the duty was later paid and accepted by the department. That later payment did not justify fastening duty or interest on the job worker, and the notification benefit could not be denied.

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Issues: Whether the job worker was entitled to the benefit of Notification No. 214/86-CE on the facts of the case, and whether duty and interest could be demanded from the job worker when the principal manufacturer had ultimately paid the duty on the job-worked goods.

Analysis: The inputs were received under Rule 57F(4) challans, processed goods were returned to the principal manufacturer under the job-work arrangement, and the requisite declaration under Notification No. 214/86-CE had been filed. The only lapse was the principal manufacturer's initial non-payment of duty at the time of clearance, though the duty was later paid and accepted by the department. In these circumstances, the procedural requirements of the notification stood substantially complied with, and the delay in payment by the principal manufacturer could not justify fastening interest or duty liability on the job worker.

Conclusion: The demand of duty and interest against the job worker was not sustainable, and the benefit of Notification No. 214/86-CE could not be denied.

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