Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs Shakti Insulated Wires Ltd on 9 March, 2010
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No. I APPEAL No. E/418/03 (Arising out of Order-in-Appeal No. 245/MV/2002 dated 26.11.2002 passed by Commissioner of Central Excise (Appeals), Mumbai-V) For approval and signature: Mr. P.G. Chacko, Hon'ble Member (Judicial) Mr. P. Karthikeyan, Hon'ble Member (Technical) ======================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
====================================================== Commissioner of Central Excise, Mumbai-V Appellant Vs. Shakti Insulated Wires Ltd. Respondent Appearance: Shri H.B. Negi, Authorised Representative (SDR), for appellant Shri Aqeel Sheerazi, Advocate, for respondent CORAM: Mr. P.G. Chacko, Hon'ble Member (Judicial) Mr. P. Karthikeyan, Hon'ble Member (Technical) Date of Hearing: 9.3.2010 Date of Decision: 9.3.2010 ORDER NO................................. Per: P.G. Chacko, M(J)
This appeal is by the Revenue, aggrieved by an order of the Commissioner (Appeals) allowing the benefit of Notification No.214/86-CE dated 25.3.1986 to the respondent. After examining the records and hearing both sides, we note that the respondent was engaged in the job work of manufacturing paper-covered copper strips for principal manufacturers like M/s. BHEL during the period of dispute. The principal manufacturers supplied copper bars/rods/strips to the respondent and the latter manufactured paper-covered copper strips out of such raw materials and paper procured by themselves. The paper was imported on payment of duties of customs including CVD and, at the time of using it in job work, reversed MODVAT credit of CVD. The job-worked goods were supplied without payment of duty, to the principal manufacturers, who, after further processes on such goods, cleared the product on payment of duty. In this scheme, the respondent was availing the benefit of Notification 214/86 ibid. The notification entitled a job worker to remove the job-worked product to the principal manufacturer without payment of duty subject to certain conditions. In this case, there is no dispute regarding fulfilment of such conditions and, therefore, we refrain from harping on the conditions of the notification. Suffice it to say that the job-worked goods were cleared by the respondent without payment of duty, to the principal manufacturers during the period of dispute (November 1998 to April 1999). In a show-cause notice dated 14.5.1999, the department demanded duty on the said goods from the respondent on the ground that the work done by them did not fall within the purview of "job work" defined in the Explanation to the notification. It was alleged in the show-cause notice that the assessee had used their own inputs in addition to the raw materials supplied by the principal manufacturers and also that the identity of the raw materials supplied by the principal manufacturers was lost in the course of activity of the assessee. These allegations were denied and the demand of duty resisted. In adjudication of this dispute, the original authority confirmed the demand of duty against the assessee and imposed on them a penalty. In an appeal filed by the assessee, the learned Commissioner (Appeals) not only held in favour of the assessee on merits but also found the demand to be time-barred. The present appeal of the Revenue is directed against the appellate Commissioner's decision.
2. We have heard the learned SDR for the appellant and the learned counsel for the respondent (assessee). The learned SDR has reiterated the grounds of this appeal. The case of the Revenue is that the processes undertaken by the respondent on the raw materials supplied by the principal manufacturers exceeded the scope of "job work" defined under the Explanation to the notification. According to the appellant, 'job work' envisaged under the notification should comprise only minor processes not amounting to manufacture. In support of this plea, the learned SDR has relied on the Hon'ble High Court's decision in Madura Coats Ltd. vs. CCE, West Bengal 1980 (6) ELT 582 (Cal.) as also on the Hon'ble Supreme Court's decision in Prestige Engineering (India) Ltd. vs. CCE, Meerut 1994 (73) ELT 497 (SC). On the other hand, the learned counsel for the respondent submits that the interpretation given by the High Court and Supreme Court to Notification No.119/75-CE in the aforesaid cases cited by the SDR is not applicable to Notification No.214/86-CE which is under consideration in the instant case. It is submitted that the old notification purported to grant partial exemption to job workers while the later notification granted full exemption from payment of duty by job workers. The learned counsel has given the special features of the scheme covered by the later notification.
3. We have considered the above submissions. As rightly pointed out by the learned counsel, the scheme covered by the subject notification (No.214/86) is vastly different from the simple purport of the old notification (No.119/75). The old notification intended to make a job worker liable only to pay duty on the job charges. The purpose is pure and simple. On the other hand, Notification 214/86-CE enabled a job worker to clear the job-worked goods without payment of duty, to the principal manufacturer, who would clear on payment of duty the final products manufactured out of the job-worked goods received from the job worker. The bone of contention between the parties to the present case is the scope of "job work". This expression was defined in Notification 214/86-CE vide the Explanation thereto, which reads as under:-
"Explanation. - For the purposes of this notification, the expression "job work" means processing of working upon of raw materials or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for the aforesaid process."
It is pertinent to note that, in the very opening paragraph of the notification, it was mentioned thus "..... the Central Government hereby exempts goods specified in column (2) of the Table hereto annexed (hereinafter referred to as the said goods) manufactured in a factory as a job work ....." The Explanation to the notification, in our view, makes the position more explicit. As per the Explanation, a job worker could process or work upon the raw materials or semi-finished goods supplied to him, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article. It is abundantly clear that a job worker was entitled to manufacture an article or goods in finished form before it is supplied to the principal manufacturer who supplied the raw materials. The scope of such job work is apparently different from what was envisaged under the old Notification 119/75 cited by the SDR. Moreover, as rightly pointed out by the counsel, the scheme of the old notification is entirely different from that of the subject notification. In this view of the matter, we have not been in a position to accept the reliance placed by the learned SDR on the aforesaid decisions of the High Court and Supreme Court, as a good ground for challenging the appellate Commissioner's order.
4. The learned SDR has also argued that the work done by the respondent could not be accepted as "job work" for purposes of Notification 214/86 inasmuch as they also used considerable amount of paper, varnishes etc. procured by themselves, in the process. As rightly pointed out by the learned counsel, it is on record that the cost of such materials (paper, varnishes etc.) incurred by the respondent was subsequently recovered from the principal manufacturers. In the result, the materials procured by the respondent and used in the job work are virtually on the same footing as the raw materials supplied free of cost by the principal manufacturers. In other words, the fact mentioned by the learned SDR would not detract from the nature of 'job work' involved in the process undertaken by the respondent. The learned counsel has also relied on certain decisions of this Tribunal with regard to the definition of "job work" given in the Explanation to Notification 214/86-CE, but we have not found these decisions to be apposite to the dispute raised before us. In our considered view, therefore, the learned Commissioner (Appeals) rightly held the benefit of Notification 214/86 to be admissible to the respondent, particularly where there was no dispute regarding fulfilment of the conditions attached thereto. The lower appellate authority is perfectly right in having held the activity of the respondent to be in the nature of "job work" as defined in the Explanation to the notification. However, we have found no application of mind on the part of the lower appellate authority in the context of considering the question whether the demand raised in the show-cause notice was time-barred. The learned Commissioner (Appeals) held that the demand was hit by time-bar in the absence of evidence of suppression or misstatement of fact by the assessee. Apparently, the appellate authority overlooked the glaring fact that the demand raised in the show-cause notice was within the normal period of limitation. The show-cause notice was issued on 14.5.1999 for recovery of duty for the period November 1998 to April 1999. As rightly pointed out by the learned SDR, the relevant date for recovery of duty for the month of November 1998 would be the fifth day of the next month (5.12.1998). The demand raised on 14.5.1999 is very much within the period of six months from this date.
5. In the result, except in respect of the finding recorded by the learned Commissioner (Appeals) as to time-bar, his order is sustained and this appeal is dismissed.
(Pronounced in Court) (P. Karthikeyan) Member (Technical) (P.G. Chacko) Member (Judicial) tvu ??
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