Job worker duty liability on processed fabrics was rejected where goods were returned to the principal manufacturer after processing.

Job workers who processed fabrics supplied by principal manufacturers and returned the processed goods under Rule 57F(3) and Rule 57F(4) of the Central Excise Rules, 1944 were not liable to pay central excise duty on the processed fabrics. The Tribunal applied its settled view in M. Tex, holding that duty liability did not fasten on the job workers where the principal manufacturer retained the duty obligation and cleared the goods on payment of duty. The order relieving the job workers of duty liability was upheld.

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Issues: Whether job workers who processed fabrics received from principal manufacturers and returned the processed fabrics under Rule 57F(3) and Rule 57F(4) of the Central Excise Rules, 1944 were liable to pay central excise duty on the processed fabrics.

Analysis: The appeal turned on the settled position that where job workers undertake processing of fabrics supplied by principal manufacturers and return the processed goods under the said rules, duty liability does not fasten on the job workers. The Tribunal noted that the factual matrix was covered by its earlier view in M. Tex and that the same legal principle applied to the present case, since the respondents had processed the fabrics on job work basis and returned them to the principal manufacturers, who cleared the goods on payment of duty.

Conclusion: The respondents were not liable to pay duty on the processed fabrics, and the order relieving them of duty liability was upheld.

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