Job-work clearances and declaration lapse: duty, interest, and penalty could not be sustained against the job worker.

In job-work clearances of raw materials under Rule 57F(3) challans, the obligation to file the declaration under Notification No. 214/86-C.E. and to bear the duty liability rested on the principal manufacturer, not the job worker. The Tribunal treated the principal manufacturer's failure to file the declaration as a procedural lapse that could not be used to fasten duty, interest, or penalty on the job worker when the materials had been supplied for conversion on job-work basis. As the demand itself was not sustainable, the extended limitation period under Section 11A of the Central Excise Act, 1944 was also not invocable.

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Issues: Whether the duty demand, interest, and related penalty could be sustained against the job worker when the raw materials were supplied under job work challans and the principal manufacturer had not filed the declaration required under Notification No. 214/86-C.E.; and whether the extended period under Section 11A of the Central Excise Act, 1944 was invocable.

Analysis: The raw materials were admittedly supplied by the principal manufacturer for conversion into corrugated boxes on job work basis and were cleared under Rule 57F(3) challans. In such a situation, the obligation to file the declaration and undertake responsibility to pay duty under Notification No. 214/86-C.E. rested on the principal manufacturer, not on the job worker. The Tribunal held that the job worker could not be penalised for the principal manufacturer's belated declaration or procedural lapse. On that footing, the demand raised against the job worker was not sustainable. Since the demand itself failed, there was no basis for invoking the longer limitation period, and the connected levy of interest and penalty also could not survive.

Conclusion: The duty demand, interest, and penalty were held unsustainable against the assessee, and the extended period was not applicable.

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