Job worker liable for excise duty due to principal's lapses; recalculated duty affects penalty.

The Tribunal held that the job worker undertaking the manufacturing activity is liable for excise duty as the principal manufacturers did not provide required undertakings. The duty liability does not shift to the supplier if necessary undertakings are not provided. Errors were found in the calculation of turnover and duty, leading to a directive for recalculation based on raw material costs. The case was remanded for reconsideration of the extended period of limitation. The penalty under Section 11AC was to be modified based on the recalculated duty, allowing for a reduced penalty amount. The matter was remanded for de-novo adjudication with specific recalculations and instructions.

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Issues Involved:
1. Duty liability of job worker vs. supplier of inputs.
2. Applicability of exemption notifications.
3. Wrong availment of SSI exemption.
4. Correct calculation of duty.
5. Invocation of extended period of limitation.
6. Liability for penalty.

Summary:

Issue 1: Duty Liability of Job Worker vs. Supplier of Inputs
The Tribunal noted that the process of sawing marble blocks into slabs amounts to "manufacture" as per Chapter 25 of the Central Excise Tariff Act, 1985. The job worker, who undertakes the manufacturing activity, is liable for excise duty. The principal manufacturers did not furnish the required undertakings under Notification Nos. 83/94-CE, 84/94-CE, or 214/86-CE, making the job worker responsible for the duty.

Issue 2: Applicability of Exemption Notifications
The Commissioner (Appeals) held that the principal manufacturers were not required to file declarations under job work exemption Notification No. 83/94-CE as marble blocks are not excisable. The Tribunal disagreed, stating that the duty liability shifts to the supplier only if they provide the necessary undertaking, which was not done in this case.

Issue 3: Wrong Availment of SSI Exemption
The Tribunal found that the respondent's sales were below the threshold exemption limit as per Notification No. 8/2003-CE. However, the method of calculating turnover and duty was erroneous. The Commissioner (Appeals) had noted errors in the valuation adopted by the revenue, as the job worker cleared rough marble slabs, not finished ones.

Issue 4: Correct Calculation of Duty
The Tribunal observed that the duty was wrongly calculated both in terms of the quantum of clearance and the calculation method. The Commissioner (Appeals) had pointed out that the valuation should be based on the cost of raw materials plus job charges, not the principal manufacturer's sale price. The Tribunal directed a recalculation of the duty and SSI exemption.

Issue 5: Invocation of Extended Period of Limitation
The Tribunal did not explicitly address the extended period of limitation but remanded the case for de-novo adjudication, implying that this aspect should be reconsidered by the original adjudicating authority.

Issue 6: Liability for Penalty
The Tribunal directed that the penalty under Section 11AC should be modified according to the recalculated duty. The respondent would be entitled to pay a reduced penalty amount upon redetermination.

Conclusion:
The appeals and cross objections were allowed by way of remand to the original adjudicating authority for de-novo adjudication, with specific directions for recalculating the duty and penalty. The respondent was instructed to seek a hearing within 45 days from the receipt of the order.

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