Temporary removal of reusable tools to job workers did not justify duty demand where manufacture and exemption status were unproven.

Duty cannot be sustained on tools, jigs and fixtures temporarily removed to job workers where the record does not establish their date of manufacture, prior exemption status, or that the movement constituted a fresh dutiable removal. The materials had earlier been used within the factory and were capable of repeated use, so the demand could not rest merely on the date of transfer to the job worker. The absence of findings on whether the outside activity was only an ancillary process connected with manufacture or amounted to full manufacture was fatal to the levy. As the duty demand failed, the connected penalty also could not be maintained.

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Issues: (i) Whether the duty demand on tools, jigs and fixtures temporarily removed to job workers could be sustained when the goods had earlier been used within the factory and the relevant date of manufacture and exemption eligibility had not been examined. (ii) Whether the penalty imposed on the appellant could survive if the duty demand itself was not sustainable.

Analysis: The demand was founded on the date of removal to the job workers, without correlating the goods to their date of manufacture or determining whether they were originally non-dutiable or exempt. The goods were of a kind used over a period of time and capable of repeated use, and the record did not establish the necessary factual basis to treat the temporary movement as a fresh dutiable removal. The authority below also did not decide whether the outside use was only for an ancillary process connected with manufacture or amounted to full manufacture by the job worker. In the absence of these essential findings, the demand could not be upheld. Since the duty demand failed, the basis for penalty also disappeared.

Conclusion: The duty demand was not sustainable and the penalty could not be maintained.

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