Job-work duty already paid cannot be demanded again from the principal manufacturer or reclubbed for SSI exemption limits.

Goods manufactured on job work and already cleared on payment of duty cannot be subjected to a second duty demand in the hands of the principal manufacturer. Following the Larger Bench ruling in K. Prashant Enterprises, the Tribunal noted that duty liability on job-worked goods arises against the person for whom manufacture is undertaken only where the job worker removes the goods without payment of duty. Where duty has already been discharged by the job worker, the principal manufacturer cannot be saddled with the same levy again, and such clearances cannot be clubbed again for SSI exemption computation to create duplicate liability. The demand was therefore held unsustainable and relief was granted.

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Issues: Whether the value of goods manufactured through job work and cleared after 01.04.2001 could be included again for computing the Small Scale Industry exemption limit, and whether duty could be demanded again from the principal manufacturer when the job worker had already cleared the goods on payment of duty.

Analysis: The Tribunal followed the Larger Bench ruling in K. Prashant Enterprises and noted that the duty liability in respect of goods falling under Chapter 62, when manufactured on job work, rests on the person who gets the goods produced on his account only where the job worker removes the goods without payment of duty. Where the job worker has already cleared the goods on payment of duty, the rule does not permit the raw material supplier or principal manufacturer to be saddled with duty again. The Tribunal further held that goods lying in stock and cleared later could not be subjected to a second levy merely for SSI computation purposes.

Conclusion: The demand was not sustainable and the assessee was entitled to relief.

Ratio Decidendi: Goods manufactured on job work and already cleared on payment of duty cannot be subjected to a second duty demand in the hands of the principal manufacturer, and such clearances cannot be clubbed again for SSI exemption computation to impose duplicate duty liability.

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