TaxTMI 
TaxTMI 
2022 (8) TMI 609
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.... pasted and the same was cleared by issuing the invoice of registered dealer. He submits that the said activity is trading activity and cannot tantamount to manufacture to attract any excise duty. He submits that there are judgments wherein, it was held that the transferring of chemicals from tanker to small drums cannot be said to be conversion from bulk pack to retail pack. As regard the labeling /relabeling, he submits that though the label was pasted but that does not render the product marketable, the product was already marketable. Therefore, merely by putting a label on the tanker cannot be said to have rendered the activity for marketing of the product, therefore, the activity in question does not amount to manufacture but it is only a trading activity, hence, no excise duty is payable on such activity. 2.1 On the second issue, he submits that if at all the activity is treated as manufacture even then the appellant is not liable to pay the excise duty on the ground that the entire activity was undertaken by the job worker therefore, the job worker becomes the manufacturer for which the duty demand cannot be made on the appellant. In this regard, he placed reliance on thi....
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....ured product ; and (ii) which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labeling or re-labelling of containers including the declaration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacturer of excisable goods, but also any person who engages in their production or manufacture on his own account; [Emphasis supplied] The definition of the manufacturer says that any person who is engaged in any of the activity specified in clause (i) to (iii) of Section 2(f) of the Act would be called as manufacturer. It is the manufacturer who under Central Excise Act and Rules is liable to pay duty unless otherwise exempted. The ownership of the goods is immaterial. Any person w....
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.... an exceptional nature to be stated in such order, any excisable goods on which duty of excise is leviable.] [(2A) The Central Government may, if it considers it necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification in the Official Gazette at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.] (3) An exemption under sub-section (1) or sub-section (2) in respect of any excisable goods from any part of the duty of excise leviable thereon (the duty of excise leviable thereon being hereinafter referred to as the statutory duty) may be granted by providing for the levy of a duty on such goods at a rate expressed in a form or method different from the form or method in which the statutory duty is leviable and any exemption granted in relation to any excisable goods in ....
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....eviable in whole or in part; or (ii) for removal to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or for supply to the United Nations or an international organisation for their official use or for supply to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue), No. 108/95-Central Excises, dated the 28th August, 1995, or (iii) for removal under bond for export, or (b) cleared as such from the factory of the supplier of raw materials or semi-finished goods - (i) on payment of duty for home consumption (on which duty of excise is leviable whether in whole or in part); or (ii) without payment of duty under bond for export; or (iii) without payment of duty to a unit in a free trade zone or to a hundred per cent. export-oriented undertaking or to a unit in an Electronic Hardware Technology Park or Software Technology Parks or supplied to the United Nations or an international organisation for their official use....
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....ich is essential for the aforesaid process. Explanation II shall be omitted. (vide Notification No. 33/2000-C.E. dt. 31.03.2000) TABLE Description of Inputs Description of final products (1) (2) All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than high speed diesel oil and motor spirit, commonly known as petrol. All goods falling under the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986), other than the following, namely :- (i) matches; (ii) fabrics of cotton or man-made fibres falling under Chapter 52, Chapter 54 or Chapter 55 of the First Schedule to the said Act; (iii) fabrics of cotton or man-made fibres falling under heading No.58.01, 58.02, 58.06 (other than goods falling under sub-heading No. 5806.20), 60.01 or 60.02 (other than goods falling under sub-heading No. 6002.10) of the First Schedule to the said Act." In terms of the above notification, it transpires that it is only in respect of goods covered by Para (1) and Para (2) of the Notification, manufactured by the jobworker, are exempted only if the same are used by the Principal Manufacturer i....
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.... which shall be valid for a financial year, in respect of removal of such input or partially processed input, and subject to such conditions as he may impose in the interest of revenue including the manner in which duty, if leviable, is to be paid, allow final products to be cleared from the premises of the job-worker. Perusal of the above sub rules reveal that Rule 4 (5) (a) is concerned only with permitting removal of inputs to the job-worker by the Principal manufacturer who has availed cenvat credit on such inputs. Pertinently, Rule 4 of the Cenvat Credit Rules is concerned with the conditions under which a manufacturer is allowed to avail cenvat credit. Rule 4 (5) (a), not cast any liability of duty upon the principal manufacturer who has sent the inputs for job-work other than the condition that in case of non receipt of goods within the stipulated period he shall be liable to reverse the cenvat credit availed on such inputs. The rule is confined to the scope of cenvat credit but has no relation with manufacture, manufacturer and payment of duty on the manufactured goods. 7.5 Similarly Rule 4 (6) is concerned with the condition under which the finished goods....
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....he duty. Following the procedure and conditions of the Notification(supra) only by the Principal manufacturer, the jobworker would be saved from payment of duty on goods manufactured by him. 7.8 In the case under reference, the facts of non payment of duty on final products by the Principal manufacturer is not disputed. The goods received from the jobworker were not used in the manufacture of dutiable final products but in goods on which no duty was paid. In such case when the Principal manufacture did not intend to pay duty on the final products, the jobworker who is manufacturer of intermediate goods is liable to pay duty. Non compliance of Notification No. 214/86 CE dt. 25.03.1986 by the Principal manufacture has resulted into duty liability upon the jobworker. Moreover, it is admitted by the appellant (job worker) that the inputs were not sent by the principal manufacturer under Notification No.214/86-CE. If the contention of the Appellant is accepted it would lead to the situation where neither the Principal manufacturer nor the jobworker would pay duty, which has not been legislated. 7.9 The Appellant has relied upon the Tribunal's order in case of ....
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....ed. It is nothing to do with the duty payment of goods. 7.11 Rule 4 (6) is a facility to the Principal manufacturer to clear the goods directly from the premises of jobworker after payment of duty. Notably it is not the case of the appellant that the Principal manufacturer paid duty at anytime as the goods manufactured by him were exempted from duty. Thus the liability for payment of duty on such intermediate goods manufactured by the Jobworker is on jobworker only. 7.12 The Tribunal Order in case of Vandana Dyeing Pvt. Ltd. Vs. CCE, Mumbai - 2014 (307) ELT 528 (TRI) and Mukesh industries Ltd. Vs. CCE, Ahmedabad - 2009 (248) ELT 203 (TRI) were rendered considering Rule 4 (5) (a) of Cenvat Credit Rules, 2001 and 2002 Rules as pari materia to 57 F (4) of erstwhile Central Excise Rules, 1944. However in our considered view Rule 57F (4) provided for payment of duty by the Principal manufacturer whereas Rule 4 (5) (a) only provides sending of cenvat availed inputs for jobwork and return of same to the Principal manufacturer implying that the Principal Manufacturer shall pay duty on the same. Accordingly those judgments are of no help to the Appellant. ....
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.... Ltd. v. CCE, (supra) CESTAT essentially held as under : Duty liability - Job worker - Respondents receiving grey MMF and knitted or crocheted fabrics from principal manufacturer under the cover of challans issued under Rule 4(5)(a) of Cenvat Credit Rules, 2001 and after completion of job work the goods stand returned to the principal manufacturer - Rule 57F(3) of erstwhile Central Excise Rules, 1944 and Rule 4(5)(a) ibid being independent provisions, fact that goods were not specified in the Notification No. 214/86-C.E. will not make a difference - No duty liability can be fastened upon the job-worker - Section 3 of Central Excise Act, 1944. [para 4]. Similarly in the case of Dhana Singh Synthetics Pvt. Ltd. v. CCE, (supra) it was held as under : Demand - Job worker - Fabric received by job worker accompanied with Challans issued under Rule 57F(5) of erstwhile Central Excise Rules, 1944 corresponding to Rule 4(5)(a) of Cenvat Credit Rules, 2002/2004, which returned after processing to principal manufacturer under said Challans without payment of excise duty - Demand raised as processed fabric not exempt under Notification No. 214/86-C.E. - HELD : Inputs ....
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.... whether the duty paid by the jobworker is available to the Principal manufacturer when the jobworker could have availed exemption under Notification No. 214/ 86 CE. The Tribunal rightly held that if the jobworker has paid duty even though he was eligible to avail exemption under the Notification, the Principal manufacturer was eligible for the credit there of as he was liable to pay duty on clearance of the final goods. Tribunal held that had the Notification No. 214/86 not issued, even under Rule 57F (2) the jobworker had to pay duty. Thus it follows that it is only by virtue of notification(supra) the goods manufactured at Joboworker's end are exempted only if the same or the final product in which such intermediate goods are used are liable for duty at the end of the Principal manufacturer which is absent in the present reference. 7.17 In case of Collector Vs. Bright Steel Mac Fabrics - 1994 (69) E.L.T. 276 (Tribunal) as upheld by the Hon'ble Apex Court in case of CCE Vs. Bright Steel Mac Fabrics - 1997 (94) ELT A145 SC, the Tribunal has rightly held that Rule 57F (2) does not envisage return of inputs after completion of processing resultin....
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.... the Commissioner (Appeals) in the impugned Orders." 7.19 The Hon'ble Apex Court in case of M/s Kartar Rolling Mills Vs. Commissioner of Central Excise, New Delhi - 2006 (197) ELT 151 (SC) held that the assessee jobworker i.e the Appellant failed to bring any evidence on record to prove that the supplier of raw material had supplied the materials to them under the provisions of Notification No. 214/86 and thus the duty demand against the assessee undertaking jobwork was upheld. The ratio laid down in the said judgment is squarely applicable to the present reference. 7.20 In case of Commissioner Vs. Span Heat Transfer Equip. Mfrs. P. Ltd. - 2001 (135) ELT 861 Tribunal held that the Notification 214/ 86 CE envisages the duty payment by the supplier of the goods for jobwork if he undertakes to pay the same. In the normal course of business, it is the jobworker being manufacturer is liable to pay duty. We are in agreement with such views of the Tribunal as in absence of undertaking by the Principal manufacturer to discharge duty liability on the Jobworked goods, it is the manufacturer of goods i.e Jobworker who is liable to pay duty. The order ....