2017 (2) TMI 366 - AT - Central Excise

Job worker deemed manufacturer, appellant not liable for Central Excise duty. Lower authorities' error corrected.

The Tribunal found that the appellant was not liable to pay Central Excise duty as the job worker, who assembled the final products using raw materials ... Benefit of N/N. 214/86-C.E. - evasion of central excise duty - appellant is supplier of raw materials and moulds to their job workers for the manufacture of the final products - Held that: - the liability to discharge Central Excise duty on the articles of plastic manufactured is on clearance from the job worker’s premises. When there is no dispute that the job worker has manufactured the articles of plastic, and there being no declaration from the appellant under N/N. 214/86, obviously the job worker is the manufacturer of the final products as he converts the raw material into finished products - appeal allowed - decided in favor of appellant. Issues:1. Appellant's liability to pay Central Excise duty for goods manufactured through job workers.2. Interpretation of Notification Number 214/86-C.E.3. Determination of the manufacturer of final products.Analysis:1. The appeal was against an Order-in-Appeal passed by the Commissioner of Central Excise (Appeals), Pune-I. Despite the appellant's absence, the appeal was taken up for disposal. The departmental representative argued that the appellant evaded Central Excise duty by supplying raw materials and moulds to job workers for manufacturing goods. The lower authorities held the appellant liable for duty as they had not claimed the benefit of Notification Number 214/86-C.E., which would discharge them from the duty liability.2. The Tribunal found that the lower authorities erred in holding the appellant liable for Central Excise duty. It was established that the job worker utilized raw materials supplied by the appellant to manufacture plastic articles, which were then assembled in a godown. The Tribunal clarified that the liability to pay Central Excise duty arises upon clearance from the job worker's premises. Since the job worker converted raw materials into finished products without any declaration from the appellant under Notification No. 214/86, the job worker was deemed the manufacturer of the final products.3. Consequently, the Tribunal concluded that the appellant had a case on merits. The impugned order was set aside, and the appeal was allowed in favor of the appellant. The judgment was pronounced in court on 5-10-2016.