Rule 57F job work goods properly accounted for remain duty-governed by the principal, not a curtailing notification.

Goods sent for bleaching and mercerising on job work under Rule 57F(3) of the Central Excise Rules, 1944, when properly covered by challans and accounted for without diversion to home consumption, remain governed by that rule. Duty liability in such a arrangement lies with the principal manufacturer, and Modvat credit or the job work benefit cannot be denied by invoking Notification No. 214/86-C.E. to narrow the rule-based exemption. The departmental circular was also treated as consistent with this position, and the Revenue's challenge failed.

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Issues: Whether goods received for bleaching and mercerising under Rule 57F(3) of the Central Excise Rules, 1944 on job work basis could be cleared without payment of duty, and whether Modvat credit or the benefit of the job work arrangement could be denied by relying upon Notification No. 214/86-C.E. dated 25-3-86.

Analysis: The goods were received under proper challans under Rule 57F(3) and were processed on job work basis for return to the principal unit. There was no allegation that the goods were not properly accounted for or that any quantity had been diverted for home consumption. The arrangement was covered by Rule 57F itself, under which the duty liability was to be discharged by the principal manufacturer. The notification relied upon by the Revenue could not curtail the benefit conferred by the rule, and the departmental circular also supported the view that the job worker was not liable to avail credit in such a situation.

Conclusion: The appeal was without merit. The order of the appellate authority was upheld, and the Revenue's challenge failed.

Ratio Decidendi: Where inputs are sent and returned under Rule 57F on job work basis and are properly accounted for without diversion to home consumption, the rule governs the duty liability and a separate notification cannot be used to curtail that statutory benefit.

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