Job-worker ruled manufacturer under Central Excise Act; quality control not relevant; CENVAT credit allowed

The Tribunal ruled in favor of the appellant, holding that the job-worker, who carried out the manufacturing activity, should be considered the manufacturer under the Central Excise Act. The Supreme Court precedent established that quality control by the job-worker does not make the appellant the manufacturer. As the job-worker had paid excise duty and was entitled to claim CENVAT credit, the appellant was not liable for excise duty. The impugned order denying CENVAT credit to the job-worker was set aside, and both appeals were allowed.

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Issues:
Appeal against order-in-appeal denying CENVAT credit to job-worker and holding the appellant liable for excise duty.

Analysis:
The appellant, engaged in manufacturing drugs and cosmetics, provided raw materials to a job-worker who manufactured final products cleared on payment of excise duty. The department denied CENVAT credit to the job-worker and held the appellant liable for excise duty. The appeal was filed by both parties against this decision.

During the hearing, both parties presented their arguments. The Tribunal referred to a Supreme Court case where it was established that the job-worker, who carried out the manufacturing activity with their labor and machinery, should be considered the manufacturer. The Court clarified the distinction between the terms 'manufacturer' under the Drugs and Cosmetics Act and 'manufacture' under the Central Excise Act, emphasizing that adherence to quality control by the job-worker does not make the appellant the manufacturer.

Based on the Supreme Court's ruling, the Tribunal concluded that the job-worker was the actual manufacturer who had paid excise duty and was entitled to claim CENVAT credit. Consequently, the impugned order was set aside, and both appeals were allowed.

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