2000 (9) TMI 319 - AT - Central Excise

Tribunal rules in favor of appellant in duty payment dispute, citing job worker as manufacturer

The Tribunal ruled in favor of the appellant, determining that they were not liable for duty payment or penalty. The appellant was found not to be the ... Manufacturer Issues:Manufacture of polypropylene ropes with master batches, duty exemption on polypropylene strips, application of Notification 214/86, liability of duty payment, penalty imposition.Analysis:The appellant was manufacturing polypropylene ropes using master batches obtained from a job worker without paying duty. The job worker did not pay duty on the master batches either. The appellant stopped paying duty on polypropylene strips after they were exempted from duty if used captively in rope manufacturing. However, the job worker continued to follow Rule 57F procedures on the challans for raw materials sent by the appellant. The department demanded duty on the master batches, considering the appellant availed exemption under Notification 214/86. The Collector held the appellant as the manufacturer, confirmed duty payment, and imposed a penalty.The Tribunal disagreed with the Collector's decision, stating that the appellant was not the manufacturer. The job worker physically made the master batches, fulfilling the manufacturing process. To avail of Notification 214/86, the raw material supplier must undertake duty payment responsibility on the finished product. The notification exempts the job worker from duty on goods made from supplied materials returned to the raw material supplier for further manufacturing. The appellant's declaration under Notification 214/86 ceased when it stopped using the Modvat procedure and informed the authorities. The job worker remained the manufacturer throughout the process, and there was no basis for demanding duty from the appellant or imposing a penalty.The Tribunal allowed the appeal, setting aside the duty demand and penalty imposition. The appellant was deemed not liable for duty payment or penalty. Consequential relief was granted if permitted by law.