TaxTMI 
TaxTMI 
2026 (4) TMI 368
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.... the contract manufacturer, i.e. M/s. Kavin Creations on job work basis. 2. Facts of the case are that the appellant had entered into an agreement with M/s.Kavin Creations for manufacture of car seat sets on contract manufacturing/job-work basis and the inputs or raw materials were provided by them to the contract manufacturer, who was availing the area based exemption under Notification No.50/2003- CE dated June 10, 2003. The finished goods manufactured by M/s. Kavin Creations were cleared to the appellant, who sold the same to M/s. Mahindra and Mahindra Limited without undertaking any manufacturing activity. On the basis of audit of records of the appellant, show cause notice dated March 3, 2022 was issued proposing to recover excise d....
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....ty on the manufacture and reproduced at the time of removal from the factory. In nut shell, she submitted that it is the job worker who has manufactured the goods in their own right and the same is evident from the terms of the agreement entered between the parties and therefore, it is the job worker who is liable to pay duty on automotive seats manufactured and cleared by them. The appellant has not undertaken any activity on the manufactured excisable goods except for supplying the raw material and some tools to the contract manufacturer. In support of her arguments, the learned counsel has referred to the following decisions:- (i) CCE, Baroda Vs. M.M. Khambhatwala [1996 (84) ELT 161 (SC)] (ii) Thermax Babcock & Wilcox L....
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....e appellant merely supplied the raw material and certain tools to the contract manufacturer, who in turn manufactured the seats for the appellant employing its own resources, labour and machinery. The terms of the agreement, which the appellant entered into with M/s. Kavin Creations explicitly provides that the relationship of the parties shall be as independent contractors. Clause 19.3 of the agreement reads as:- "Nature of Relationship: The relationship of the Parties shall be that of independent contractors. Nothing in this Agreement shall make or deem to make a Party, its employees, associates or agents the employees, agents or legal representatives of the other Party for any purpose whatsoever. Neither Party has any express or....
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....Babcock & Wilcox Ltd. versus Commissioner of Central Excise, Pune-I [2018 (364) ELT 945 (Tri.-LB)] laid down the principle that the job worker being the manufacturer of goods is liable to pay duty on the goods manufactured by him on job work basis. The ownership of the goods is immaterial for the purpose of duty and thus any person who has undertaken the activity of manufacture is liable to pay duty. The Bench considered the Notification No.214/86-CE dated March 25, 1986 and observed that in order to save the job worker from payment of duty, the principal manufacture has to own the liability to pay such duty by virtue of the said notification and thereby the liability of the job worker to pay duties are transferred to the principal manufact....
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....pal manufacturer has resulted into duty liability upon the job worker. Moreover, it is admitted by the appellant (job worker) that the inputs were not sent by the principal manufacturer under Notification No. 214/86-C.E. If the contention of the appellant is accepted it would lead to the situation where neither the principal manufacturer nor the job worker would pay duty, which has not been legislated." 10. The Larger Bench, therefore, reiterated the principle that neither the goods after job work were cleared as such on payment of duty nor were used in manufacture of dutiable final products by the principal manufacturer, therefore, the duty liability would be on the real manufacturer of goods i.e., the job workers. 11. In a recent de....
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....in Godrej Hershey Limited versus Commissioner of Central Excise & ST, Bhopal, the Principal Bench referring to the observations of the Supreme Court in Ujagar Prints versus Union of India & Ors. that the question whether the producer or the manufacturer is or is not the owner of the goods is not determinative of the tax liability held that the demand of excise duty is not maintainable against the appellant since no manufacturing process has been undertaken by them though they were owner of the goods in question. 15. We may briefly refer to the decision of the Apex Court in CCE, Goa versus Cosme Pharma Laboratories [2015 (318)ELT545(S.C.)] where it was held that when the manufacturing activity was done only by the job workers in their pre....