TaxTMI 
TaxTMI 
2023 (12) TMI 523
X X X X Extracts X X X X
X X X X Extracts X X X X
....I exemption notification no. 83/ 94 dated 11.04.1994, for which they were receiving the various raw materials from the principal manufacturer, M/s Aditya for manufacture of main rafter. On completion of job work, the appellant returned the main rafter to M/s Aditya and issued job work commercial invoices. The process carried out by the appellant amounts to 'manufacture', therefore central excise duty is chargeable on the said goods under section 3 of the Central Excise Act, 1944 (hereinafter referred to as the "Act") to which the appellant claimed that the central excise duty so leviable is exempt from payment by virtue of the exemption notification no. 83/94 CE dated 11.04.1994, as amended. 3. As M/s Aditya were not registered under the Act so the job work charges received by the appellant appeared to be taxable under the provisions of the Act and accordingly show cause notice dated 8.0 9.2020 was issued to the appellant as to why central excise duty on the value of the main rafter manufactured by them on job basis should not be demanded from them under the provisions of section 11 A (4) of the Act and interest and penalty should not be imposed. The adjudicating authority by th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion under the notification was on the principal and therefore, any failure on his part to comply with the conditions, the duty liability shall be on the principal itself. 5. The first thing to be appreciated is that as per Section 3 of Central Excise Act, 1944, the excise duty is leviable on 'manufacture' and the goods here are manufactured by the appellant so the liability to pay duty is that of the appellant. However, by virtue of the exemption notification no. 83/94, the liability of central excise duty has been shifted from the job worker to the principal manufacturer, however, subject to the conditions specified therein. In the present case, M/s Aditya being SSI unit is availing exemption from excise duty under notification no. 8/2003- CE, however the exemption under notification no. 83/94-CE is available only on furnishing of an undertaking by M/s Aditya to the proper officer having jurisdiction over the factory of the job worker, (a) that the specified goods received from the job worker will be used in the factory of the supplier in or in relation to the manufacture of specified goods which are exempt from the whole of the duty of excise leviable thereon under the small s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ench in the case of Thermax Babcock & Wilcox Ltd V Commissioner of C.EX., Pune, 2018 (364) ELT 945, which has not been challenged by the party and has been followed by the Tribunal in a latest decision in Commissioner, Central Excise & CGST, Jodhpur-1 V Khemani Metal Industries Pvt. Ltd, Excise Appeal No. 51328 of 2019 dated 30.06.2013 observing that the Larger Bench decision has set the controversy at rest. The noncompliance of the said condition of the Notification No 214/86 by the principal manufacturer has resulted into duty liability upon the job worker. Relevant paragraph of the decision of the Larger Bench is quoted hereunder : "7.6 The job worker being the manufacturer of goods is liable to pay duty on goods manufactured by him albeit on job work. The ownership of the goods is immaterial for the purpose of levy of duty and thus any person who has undertaken the activity of manufacture is liable to pay duty. In order to save the job worker from payment of duty the principal manufacturer has to own the liability to pay such duty. It is only by virtue of the Notification No. 214/86-C.E., dated 25-3-1986 that the liability of the job worker to pay duty is transferred t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ise duty leviable thereon under notifications no.214/86-Central Excise dated the 25th March, 1986 (G.S.R. 547 (E), dated the 25th March, 1986), or No.83/94-Central Excise, dated the 11th April, 1994 (G.S.R. 375 (E) dated the 11th April, 1994), or No.84/94- Central Excise dated the 11th April, 1994 (G.S.R. 376 (E), dated the 11th April, 1994)." I do not agree with the submissions of the learned Counsel for the appellant as the provisions of Rule 10A of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 in clear terms determines the value of excisable goods where they are produced or manufactured by a 'job worker'. Rule 10 A reads as under:- "Rule 10A. Where the excisable goods are produced or manufactured by a job-worker, on behalf of a person (hereinafter referred to as principal manufacturer), then,- (i) in a case where the goods are sold by the principal manufacturer for delivery at the time of removal of goods from the factory of job-worker, where the principal manufacturer and the buyer of the goods are not related and the price is the sole consideration for the sale, the value of the excisable goods shall be the transaction va....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the levy of interest and the penalty is maintainable in the present case. The appellant has deliberately indulged in evading the duty liability in as much as he has been paying the excise duty in respect of the supply of the same goods to other customers, which shows that the appellant is aware of the duty liability. On the one hand, the appellant has been taking shelter under the exemption notification to say that the liability to pay the excise duty is on the principal manufacturer but, on the other hand, he is avoiding the conditions under the Notification, whereby he would be eligible to seek exemption. The appellant cannot be allowed to pick and choose what is beneficial to him and discard the conditions specified. That the ingredients of willful suppression of facts so as to avoid the payment of central excise duty exists. The Authorities below are justified in imposing penalty under the provisions of Section 11 AC of the Act, relying on the decision of the Apex Court in the case of Chairman, SEBI Vs. Shriram Mutual Fund - 2006 5 SCC 361 that mens rea is not an essential element for imposing penalty. Further, in view of the law laid down in Union of India Vs. Rajasthan Spinni....