Job worker duty liability on processed fabrics returned to manufacturers is not fastened where final clearance is by the manufacturer.

A job worker processing fabrics received under Rule 57F(4) of the Central Excise Rules, 1944 and returning them to the same manufacturers is not liable for the central excise duty on those processed fabrics. The duty burden remains with the manufacturers who make the final clearance and pay duty on the goods. Applying its earlier view on heat setting and stentering of fabrics received under challans, the Tribunal treated the Commissioner (Appeals) as correct in setting aside the demand raised against the job worker. The revenue challenge therefore failed, and the demand against the job worker was rejected.

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Issues: Whether a job worker processing fabrics under Rule 57F(4) of the Central Excise Rules, 1944 could be saddled with duty liability when the processed fabrics were returned to the manufacturers who cleared them on payment of duty.

Analysis: The Tribunal followed its earlier decision holding that, where fabrics are received under challans under Rule 57F(4), subjected to heat setting and stentering, and then returned to the same manufacturers, the job worker is not liable for the duty on those goods. The duty burden remains with the manufacturers who effect the final clearance on payment of duty. The Commissioner (Appeals) therefore correctly reversed the demand confirmed against the job worker.

Conclusion: The job worker was not liable to be assessed with duty on the processed fabrics returned to the manufacturers.

Final Conclusion: The Revenue's challenge failed, and the demand against the job worker stood set aside.

Ratio Decidendi: A job worker processing goods received under Rule 57F(4) and returning them to the manufacturers is not the person on whom duty liability can be fastened when the manufacturers themselves clear the goods on payment of duty.

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