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of <h1>High Court clarifies liability for excise duty between manufacturer & contractors</h1> <h3>Commissioner of Central Excise, Kolkata – II Versus M/s. Comet Technocom (P) Ltd. & Ors.</h3> Commissioner of Central Excise, Kolkata – II Versus M/s. Comet Technocom (P) Ltd. & Ors. - TMI Issues:Determining liability for excise duty between manufacturer and independent contractor.Analysis:The High Court of Calcutta, comprising Justice I. P. Mukerji and Justice Md. Nizamuddin, addressed a substantial question of law regarding the liability of excise duty in a case where an assessee sent materials to job workers for manufacturing the final product. The crucial issue revolved around establishing whether the job workers were agents of the assessee working under their supervision and control, making the assessee the real manufacturer liable for excise duty, or if the job workers were independent contractors with minimal supervision, thereby shifting the liability to them. The Court referred to a Supreme Court judgment in Collector of Central Excise, Baroda v. M. M. Khambhatwala, emphasizing the importance of determining the actual manufacturer based on control and supervision. The tribunal's initial order in this case was deemed detailed but lacking in the investigation of this crucial distinction.The Supreme Court's ruling highlighted that in cases where manufacturers supplied raw materials to outside workers who operated without power and minimal supervision, the outside workers were considered the actual manufacturers liable for excise duty. The Court observed that the tribunal failed to consider this principle while addressing the issue at hand. Consequently, the High Court set aside the tribunal's order dated 5th December 2018 and directed a rehearing to redetermine the liability for excise duty after thoroughly investigating the relationship between the manufacturer and the workers. The Court instructed the tribunal to pass a reasoned order within four months of communication of this directive, thereby disposing of the appeal and the connected application.In conclusion, the judgment underscores the significance of determining the actual manufacturer based on control and supervision in cases involving job workers. The High Court's decision to remand the case to the tribunal for a detailed reconsideration highlights the importance of correctly attributing liability for excise duty between the manufacturer and independent contractors based on the facts and circumstances of each case.
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