Rule 57F(4) does not impose duty on a job worker returning processed fabrics to the principal manufacturer.

Rule 57F(4) of the Central Excise Rules, 1944 permits a principal manufacturer to remove inputs or partly processed inputs for specified processing outside the factory and their return within the prescribed time. On this construction, the sub-rule does not itself create a central excise duty liability in the hands of the job worker when processed fabrics are returned after heat setting and stentering. The provision contemplates duty, where applicable, at the stage of subsequent home consumption by the principal manufacturer, supporting the view that the same goods are not meant to suffer duty twice. Reliance on Notification No. 214/86-C.E. and Rule 57F(2) decisions was treated as inapposite.

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Issues: Whether a job worker receiving inputs under Rule 57F(4) of the Central Excise Rules, 1944 and returning the processed fabrics to the principal manufacturer after heat setting and stentering was liable to pay central excise duty on such return clearance.

Analysis: Rule 57F(4) permits removal of inputs or partially processed inputs outside the factory of the manufacturer of final products for specified processing and return within the prescribed time for further use, home consumption on payment of duty by the principal manufacturer, or export under bond. On this construction, the sub-rule deals with movement of inputs by the principal manufacturer and does not itself create a duty liability at the hands of the job worker when the processed goods are returned to the principal manufacturer. The presence of clause (ii) showing subsequent removal for home consumption by the principal manufacturer supports the view that duty is not intended to be levied twice on the same goods. The reliance on Notification No. 214/86-C.E. and on decisions rendered in the context of Rule 57F(2) was treated as inapposite to the present statutory setting.

Conclusion: The job worker was not liable to pay duty on the processed fabrics returned to the principal manufacturer under Rule 57F(4); the demand could not be sustained.

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