Job-work procedure lapse under Notification 214/86-CE did not shift excise duty burden to the job worker.

Where a job worker manufactured goods from raw materials supplied by the principal manufacturer, failure to follow the procedure under Notification No. 214/86-CE was treated as a procedural lapse and not a ground to fasten central excise duty on the job worker. The clearance records showed movement of goods to the principal manufacturer, and the later discharge of duty by the principal manufacturer under the Sabka Vishwas Scheme supported the view that the goods had already suffered duty. On that basis, the demand of duty, interest and penalties against the job worker was held unsustainable and was set aside.

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Issues: Whether the demand of central excise duty, interest and penalties against the job worker was sustainable when the raw materials were supplied by the principal manufacturer and the job-work procedure under Notification No. 214/86-CE was not followed.

Analysis: The appellant was found to be carrying on manufacture on materials supplied by another manufacturer and the clearance records showed movement of goods to the principal manufacturer. The omission to follow the procedure under Notification No. 214/86-CE was treated as a procedural lapse and not as a basis for fastening duty on the job worker. The reasoning adopted was that, where the raw materials are supplied by the principal manufacturer, the duty burden does not shift to the job worker merely because the prescribed job-work procedure was not followed. The subsequent discharge of duty by the principal manufacturer under the Sabka Vishwas Scheme also supported the conclusion that the goods had already suffered duty.

Conclusion: The demand of duty, interest and penalties against the appellant was not sustainable and was set aside.

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