Job work excise duty and Cenvat credit cannot be denied absent irregularity, and extended limitation needs proof of suppression.
Duty paid on goods manufactured through a sister concern on job work basis under Notification No. 214/86-CE was not recoverable under section 11D merely because the factory was sold, since the duty had already been paid and there was no basis to treat the amount as duty collected but not payable. Cenvat credit reversal under rule 14 was also not justified because a person getting goods manufactured outside the factory can qualify as a manufacturer under section 2(f), and no irregular credit availment was shown. The extended limitation period under the proviso to section 11A could not be invoked without specific allegations and proof of suppression or wilful misstatement.
Issues: (i) Whether duty amounts paid on goods manufactured on job work basis could be recovered under section 11D of the Central Excise Act, 1944; (ii) whether reversal of Cenvat credit under rule 14 of the Cenvat Credit Rules, 2004 read with sections 3 and 4 of the Cenvat Credit Rules, 2004 was justified; (iii) whether the demand was barred by limitation under the proviso to section 11A of the Central Excise Act, 1944.
Issue (i): Whether duty amounts paid on goods manufactured on job work basis could be recovered under section 11D of the Central Excise Act, 1944.
Analysis: The goods were manufactured through a sister concern on job work basis under Notification No. 214/86-CE dated 16.03.1986, and the duty on the finished goods stood paid by the appellant. The fact that the factory had been sold did not by itself negate the continuing registration till surrender, and there was no finding that the duty collected was not payable as excise duty.
Conclusion: The demand under section 11D of the Central Excise Act, 1944 was not sustainable and is decided in favour of the assessee.
Issue (ii): Whether reversal of Cenvat credit under rule 14 of the Cenvat Credit Rules, 2004 read with sections 3 and 4 of the Cenvat Credit Rules, 2004 was justified.
Analysis: The only objection was that credit was used for payment on goods not manufactured in the appellant's own premises. The appellant had got the goods manufactured on job work basis in accordance with the notification, and the term manufacturer under section 2(f) of the Central Excise Act, 1944 includes a person who gets goods manufactured outside the factory. No evidence was shown that credit had been taken irregularly.
Conclusion: The demand for reversal of Cenvat credit was not justified and is decided in favour of the assessee.
Issue (iii): Whether the demand was barred by limitation under the proviso to section 11A of the Central Excise Act, 1944.
Analysis: The notice mechanically invoked the extended period without any specific allegation or finding of suppression of facts, wilful misstatement, or similar ingredients. The department had knowledge of the facts when officers visited the premises, and therefore the extended period could not be applied.
Conclusion: The demand was time-barred and is decided in favour of the assessee.
Final Conclusion: The impugned order was set aside, and the appeals were allowed with consequential relief to the assessee and the director.
Ratio Decidendi: Where goods are manufactured on job work basis in compliance with the applicable notification, duty paid thereon cannot be recovered under section 11D or by reversing credit merely because the factory was sold, and the extended limitation period under section 11A cannot be invoked without specific allegations and proof of suppression or wilful misstatement.