Job work treatment for imported inputs defeats sale allegation and preserves customs exemption conditions.

Movement of imported Beta Napthol to job workers under Annexure-II challans, with return of processed Gamma Acid, was treated as job work because the invoices deducted the value of the supplied input and no transfer of property in the imported goods took place. Minor consumables used by the job worker did not change the essential character of the transaction, and reliance on a sale invoice and VAT payment was insufficient on the facts to convert it into a sale. The arrangement did not breach the conditions of the relevant customs notifications, so the demand for duty, interest and penalties was unsustainable.

---

---

Issues: Whether the movement of imported Beta Napthol to job workers and receipt back of processed Gamma Acid amounted to sale or transfer of the imported goods so as to violate the conditions of Notification No. 93/2004-Customs dated 10.09.2004 and Notification No. 32/2005-Customs dated 08.04.2005, and to deny the exemption claimed under the Advance Authorisation Scheme and Target Plus Scheme.

Analysis: The goods were sent under Annexure-II challans for job work and were returnable as processed goods. The invoices raised by the job worker showed that the value of the supplied Beta Napthol was deducted from the total value, indicating that the imported input was not sold to the job worker and that no transfer of property in the goods took place. The arrangement was treated as job work in the appellant's own earlier proceedings, and the same approach was supported by the Tribunal and affirmed by the High Court in similar facts. The presence of some minor consumables used by the job worker did not alter the essential character of the transaction as job work. The contrary reliance on a sale invoice and VAT payment was held insufficient to convert the transaction into a sale on the facts of the case.

Conclusion: The transaction was held to be job work and not sale or transfer in any other manner. There was no breach of the conditions of the notifications, and the demand of duty, interest, and penalties was unsustainable.

---