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Issues: (i) Whether removal of inputs to job workers for manufacture of intermediate products attracted Rule 57F(1)(ii) of the Central Excise Rules, 1944; (ii) Whether the assessee was entitled to the benefit of Rule 57F(2) despite alleged procedural non-compliance and notwithstanding that the job workers did not avail Notification No. 214/86-C.E.
Issue (i): Whether removal of inputs to job workers for manufacture of intermediate products attracted Rule 57F(1)(ii) of the Central Excise Rules, 1944
Analysis: Rule 57F(1)(ii) applies where inputs on which credit has been taken are removed from the factory for home consumption. The inputs in question were sent to job workers for further manufacture of intermediate products, which were to be returned for use in the manufacture of final products. Such removal could not be treated as removal for home consumption.
Conclusion: The provision in Rule 57F(1)(ii) did not apply and the demand could not be sustained on that basis.
Issue (ii): Whether the assessee was entitled to the benefit of Rule 57F(2) despite alleged procedural non-compliance and notwithstanding that the job workers did not avail Notification No. 214/86-C.E.
Analysis: Rule 57F(2) operates as an exception to Rule 57F(1) and begins with a non-obstante clause. The record showed substantial compliance with the prescribed procedure, including a request for general permission. The Tribunal also rejected the objection based on the job workers paying duty instead of availing Notification No. 214/86-C.E., following earlier decisions on the point.
Conclusion: The assessee was entitled to the benefit of Rule 57F(2), and the objections based on procedural lapses and Notification No. 214/86-C.E. were rejected.
Final Conclusion: The impugned demand was set aside and the appeals were allowed on the basis that the earlier decision in the assessee's own case squarely governed the controversy.
Ratio Decidendi: Inputs sent to job workers for further manufacture of intermediate products for return to the principal manufacturer are not removed for home consumption, and Rule 57F(2) must be applied with due regard to its overriding and exception-making character where there is substantial compliance with the prescribed procedure.
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