Job-work exemption procedure accepted by department bars later duty demand, confiscation and penalties on the manufacturer.

Duty demand, confiscation and penalties on a job-worker were unsustainable where the goods were manufactured under Notification No. 84/94 and the prescribed exemption procedure had been followed with an undertaking accepted by the jurisdictional Assistant Commissioner. The manufacturer was entitled to rely on that departmental acceptance, and a later Revenue view that the principal was only a trader could not retrospectively create liability against the job-worker. On that basis, the common order below was annulled and the appeals succeeded with consequential relief.

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Issues: Whether the duty demand, confiscation and penalties could be sustained when the goods were manufactured on job-work basis for the principal manufacturer under Notification No. 84/94 and the procedural requirements of the notification had been followed, but the Revenue later took the view that the principal was only a trader and not entitled to the benefit of the notification.

Analysis: The manufacturing unit acted on challans and an undertaking furnished by the principal manufacturer to its jurisdictional Assistant Commissioner as required by the notification. The jurisdictional officer had accepted the undertaking and no objection was raised at the relevant time. In those circumstances, the manufacturer was entitled to proceed on the basis that the notification procedure had been validly followed. A subsequent change in the Revenue's view that the principal was not a manufacturer could not be used to fasten duty liability on the job-worker or to justify confiscation and penalties, especially when the statutory procedure had already been permitted by the department.

Conclusion: The duty demand, confiscation and penalties were not sustainable and were set aside in favour of the assessees.

Final Conclusion: The common order below was annulled and the appeals succeeded with consequential relief.

Ratio Decidendi: Where the prescribed exemption procedure has been followed and accepted by the jurisdictional authority, a later departmental reassessment of eligibility cannot retrospectively impose duty, confiscation, or penalties on the job-worker who acted on that acceptance.

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