Strict compliance for job-work exemption under central excise notifications upheld; duty demand sustained and penalties reduced.

Job-work clearances qualified for exemption under Notification No. 214/86-C.E. only on strict compliance with its conditions, including the supplier's undertaking and evidence that the goods were used in final manufacture. The record did not show that the raw materials were supplied under that notification; the challans only reflected movement under Rule 57F(2) of the Central Excise Rules, 1944. The earlier remand did not permit disregard of the notification conditions, and the duty liability structure under the notification did not shift to the raw-material supplier. The finding that the goods were excisable and that clearances exceeded the limit under Notification No. 1/93-C.E. was maintained, with duty sustained and penalties reduced.

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Issues: Whether the appellants were entitled to exemption in respect of goods manufactured on job work basis under Notification No. 214/86-C.E. and Notification No. 1/93-C.E., and whether the demand of duty and consequential penalty were sustainable.

Analysis: The exemption under Notification No. 214/86-C.E. applies only when the prescribed conditions are satisfied, including the supplier's undertaking and production of evidence showing use of the job-work goods in the manufacture of final products. The record did not establish that the raw material was supplied under Notification No. 214/86-C.E.; the challans relied upon by the appellants referred only to movement under Rule 57F(2) of the Central Excise Rules, 1944. The earlier remand did not authorise disregard of the notification's conditions, and the liability structure in the notification did not shift duty on the job-work goods to the supplier of raw material. The finding that the goods were excisable and the rejection of the marketability plea followed the earlier determination. The findings that the clearances exceeded the limits under Notification No. 1/93-C.E. were also not displaced.

Conclusion: The demand of central excise duty was sustained, while the penalties were reduced.

Ratio Decidendi: Exemption for job-work goods is available only on strict compliance with the conditions of the governing notification, and where the record does not show that the goods moved under that notification, the duty demand on the job worker can be upheld.

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