Job worker not liable for central excise duty on inlay cards under Notification 83/94-CE exemption

The CESTAT Mumbai held that the job worker was not liable for central excise duty on inlay cards manufactured during job work operations. The appellant, acting as job worker, received raw materials from the principal manufacturer for cutting PVC rigid rolls into smaller pieces and piercing them for jewelry display. The tribunal found this activity constituted job work under Notification 83/94-CE, which exempts goods manufactured at job work from excise duty. Consequently, the demand confirmation and penalty imposition under Rule 26 of Central Excise Rules, 2002 were set aside, and the appeal was allowed.

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Issues involved:
The issue involved in this case is whether M/s. Leo Pack, engaged in cutting, slitting, and punching of PVC rigid rolls supplied by M/s. MEC Engineers for making inlay cards, is liable to pay central excise duty on the processed material.

Comprehensive details of the judgment:

Issue 1: Liability to pay central excise duty
The Revenue initiated investigations against M/s. Leo Pack based on documents and statements, alleging non-registration, non-maintenance of records, and non-payment of central excise duty on inlay cards. The show cause notice demanded central excise duty from M/s. Leo Pack and proposed a penalty on the partner. M/s. Leo Pack contended that they were merely doing job work for M/s. MEC Engineers, who paid central excise duty on the final product. They argued that they were not liable to pay excise duty as job workers. They also challenged the quantification method used for raising the demand. The original order was challenged, and the issue was remanded to consider the appeal. The subsequent order confirmed central excise duty against M/s. Leo Pack and imposed a penalty on the partner. The appellants challenged this order before the Tribunal.

Issue 2: Interpretation of Notifications
The appellant argued that Notification No. 83/94-CE and Notification No. 84/94-CE were applicable in their transaction with M/s. MEC Engineers. They claimed that as job workers, they were exempt from paying central excise duty. The appellant contended that the original authority did not consider this aspect and confirmed the demand incorrectly. They argued that the impugned order did not adhere to the Tribunal's directions.

Court's Decision
After considering the submissions and evidence, the Tribunal found that M/s. Leo Pack was a job worker for M/s. MEC Engineers, as evidenced by statements and invoices. The Tribunal referred to Notification No. 83/94-CE, which exempts goods manufactured at job work from excise duty if certain procedures are followed. Since central excise duty was paid by M/s. MEC Engineers when clearing the goods, M/s. Leo Pack was not liable to pay excise duty. Therefore, the impugned order was set aside, and both appeals were allowed.

(Order pronounced in the open court on 07.03.2024)

This summary provides a detailed overview of the legal judgment, addressing the issues involved and the Tribunal's decision on each issue.

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