Tribunal Overturns Duty Demand, Emphasizes Principal Manufacturer's Responsibility

The Tribunal set aside the duty demand confirmed by the Commissioner of Central Excise, Jaipur-I, amounting to &8377; 4,05,063 against the appellants for goods covered by three challans under Rule 4 (5) (a) of Cenvat Credit Rules, 2004. The Tribunal found the duty demand unjustifiable for one clearance dated before the tariff amendment, clarified that the responsibility for accounting credit availed inputs rested with the principal manufacturer, and emphasized that the delay in filing the declaration by the principal manufacturer alone could not warrant confirming the duty demand. The appeal was allowed.

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Issues: Duty demand on job work basis, liability of duty on product cleared, responsibility for accounting of credit availed inputs, delay in filing declaration under Notification No. 214/86-CE.

In this case, the appeal was made against the order of the Commissioner of Central Excise, Jaipur-I, confirming a duty demand of &8377; 4,05,063 pertaining to goods covered by three challans issued under Rule 4 (5) (a) of Cenvat Credit Rules, 2004. The appellants were engaged in drawing S.S. wire from wire rod on a job work basis. The statutory amendment in the tariff effective from 08.07.2004 classified drawing wire from wire rod as a manufacturing process, making the appellant liable for duty on products cleared from that date. The original authority examined clearances made from that date and restricted the demand to three clearances due to the principal manufacturer's failure to file a declaration in time under Notification No.214/86-CE.

Upon hearing both sides and examining the records, the Tribunal noted that one of the challans was dated before the tariff amendment, making the duty demand unjustifiable for that clearance. The responsibility for accounting and disposal of credit availed inputs from clearances made under Rule 4 (5) (a) rested with the principal manufacturer, not the job worker. The delay in filing the declaration by the principal manufacturer alone could not justify confirming the duty demand. The Tribunal referenced decisions from the Hon'ble Kerala High Court and the Tribunal in similar cases to support this reasoning.

Consequently, the Tribunal found no merit in the impugned order and set it aside, allowing the appeal. The decision was dictated and pronounced in the open court by the Tribunal members, Mr. S.K. Mohanty and Mr. B. Ravichandran.

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