Customs, Excise and Gold Tribunal - Delhi
M. Tex And D.K. Processors (P) Ltd. vs Commissioner Of Central Excise on 14 January, 2000
Equivalent citations: 2000(68)ECC578, 2001(136)ELT73(TRI-DEL)
ORDER A.C.C. Unni, Member (J)
1. These two appeals raising a common issue were heard together and are beinj disposed of by this order.
2. Appellants are engaged in the process of heat setting and stentering of fabric falling under Chapter 55 of the Central Excise Tariff Act, 1985. Such fabrics an supplied to them by their customers. The Department's case is that appellants hac received the said goods under cover of challans from various units of manufacturer: of man made fabrics for conducting the processes of heat setting and stentering or job-work-basis. Since they had cleared the same from their factory without paymen of Central Excise duty and Additional excise duty, such duty was required to be paid by them. Reliance has been placed on Chapter Note 4 of Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985. The Department's further case is the the said clearances are not covered by any exemption notification relating to jot workers such as Notification No. 214/86. As such, the processes engaged in by the appellants as job-workers were chargeable to basic excise duty of 12% ad valor err and additional duty of excise at the rate of 8% ad valorem.
3. The matter was adjudicated by the Commissioner who by the impugned order dated 27.11.97 confirmed the duty demand. This appeal is against the said order.
4. The Commissioner rejected the contention of the present appellants that since they had received the fabrics as such or as partly processed fabrics under Rule 57F(3)/57F(4) from the principal manufacturers for job work, they were not liable to pay any duty. Commissioner held that Rule 57F only stipulated that the manufacturer may remove the inputs for carrying out any operation necessary for the manufacture of final product and return the same to his factory for further use in the manufacture of final product and that the said rule no where granted any exemption to job- workers for clearing the processed goods by them without payment of duty. He further held that for granting exemption to the job worker, there has to be specific exemption. He further observed that Notification No. 214/86 dated 25.3.86 as amended exempting specific items mentioned in column 2 of the Table to the said notification exempted only such items if they were manufactured in a factory as a job work and used in or in relation to the manufacture of final products mentioned in column 3 of the Table to the notification. He held that the exemption was applicable only to goods in respect of which the supplier of the raw material or semi-finished goods had given an undertaking that the said goods would inter alia, be used in or in relation to the manufacture of final products in his factory. Since the fabrics falling under Chapter 55 were not specified as final products in column 3 of the Table to the Notification No. 214/86, no exemption was available to such fabrics which were subjected to the process of heat setting and stentering by the job workers. He relied on theTribunal decision in tacit Asia Ltd. v. L.C.E. reported in 1991 (54) LL1 J47, as also further decision of the Tribunal in Bright Steel Mac Fabrics v. C.C.E. . He also referred to Chapter Note 4 of Chapter 55 to hold that heat setting and stentering carried out by the appellants would amount to manufacture.
5. Ld. Counsel, Shri V. Sridharan, appearing for the appellants submitted that Rule 57F(4) after its amendment in March, 1995 referred to processed goods being returned by the job worker to the factory of the principal manufacturer for (i) further use in the manufacture of the final products, (ii) removing after payment of duty for home consumption, and (iii) removing the same without payment of duty under bond for export. He argues that if the intention of the said rule was that the job worker can return the processed goods to the principal manufacturer only on payment of duty, then Rule 57F(4)(ii) could not have stipulated removal of the processed goods by the principal manufacturer again on payment of duty for home consumption. In other words, if it was a condition that the job worker is required to return the processed goods on payment of duty to the principal manufacturer, then the principal manufacturer would not have been required to pay duty once again when he removes the goods. Similarly, Rule 57F(4)(iii) which referred to removal of the processed goods without payment of duty under bond for export clearly implied that the job-worker would not have paid duty at the time of removal of the processed goods from his premises to the factory of the principal manufacturer. Therefore, a combined reading of Rule 57F(4) (ii) and (iii) would conclusively show that when the main Rule 57F(4) refers to the return of the goods to the factory of the principal manufacturer, it evidently refers to return of the goods without payment of duty. He also derives support for the said proposition from the provisions of Rule 57F(6), (7) and (9). He draws attention to Rule 57(6), requiring the input to be removed by the principal manufacturer on payment of an amount equivalent to 10% of the value of the input against removal challan. Likewise, under Rule 57F(7), the manufacturers can take credit on the processed input received back by him on the strength of the triplicate copy of the challan. Again, as per Rule 57F(9), credit can be taken back by the principal manufacturer only when the input is received under the cover of duplicate copy of the challen of the manufacturer. Rule 57F(9) does not require issue of invoice or gate pass Under Rule 52A by the job worker/processor. All this would go to show that the job-worker was not liable to pay excise duty when he returns the material back to the principal manufacturer, according to Ld. Counsel. As regards the two decisions of the Tribunal viz., Facit Asia and Bright Steel Mac (supra), Ld. Counsel contended that the said cases related to situations covered by Rule 57F(2) which was quite different from the situation contemplated Under Rule 57F(4)(ii) which is the rule relevant for the appeals presently under consideration. As regards applicability or otherwise of Notification No. 214/86 to the facts of the instant appeals, Ld. Counsel contended that the said Notification operated in a different field and was meant for a different purpose. He further submitted that job-worker operating Under Rule 57F(4) is not a manufacturer. He also submitted that it was not necessary that non-dutiability should be backed by exemption notification.
6. Ld. SDR submitted that there was no scope for interpreting Rule 57F as covering removal of processed goods by a job-worker without payment of duty. The said rule inter alia stipulated that a manufacturer may remove the input in carrying out any operation for the manufacture of final products and return the same to the factory fo further use in the manufacture of final products. The rule provided only for remova of inputs for further processing by the manufacturer and not by the job worker. He further submitted that the scheme of Rule 57F was independent and different from the scheme of Notification No. 214/86. He referred to the Tribunal decision in Brigh Steel Mac Fabrics (supra) in which the provisions of Rule 57F(2) was considered and it was held that Rule 57F(2) does not envisage return of inputs after completion o: processing resulting in a semi-finished goods or intermediate goods without paymen of duty. It was held that in such cases job-workers were independent manufacturers Similarly, in the case of Facit Asia Ltd. (supra) also, it was held that under Modvai scheme and the rules framed thereunder, there was no provision for intermediate product manufactured in terms of Rule 57F(2) being cleared without payment of duty. Ld. SDR also submitted that in case of doubt about availability of exemptior under any notification, the presumption should be in favour of the Revenue.
7. We have considered the submissions advanced by both sides. We observe from the scheme of Rule 57F(4) that it deals with a situation where the manufacturei of the final products has to remove the inputs to a place outside his factory for carrying out testing, repairing etc. which are necessary for the manufacture of final products or for the manufacture of intermediate products. The inputs so removed have to be returned to the factory of manufacturer of the final products within a period of 60 days or any extended period allowed by the As3t. Collector. Further, the removal of the inputs to a place outside the factory of the manufacturer of the final products can be only for purposes of further use in the manufacture of the final product or for removing them after payment of duty for home consumption or for removing the same for export on payment of duty under bond. Moreover, conditions in Sub-rule (4) to Rule 57F also do not talk of any removal by a job worker without payment of duty. In other words, the scheme of Rule 57F, in our view, does not deal with the situation of job worker removing the inputs or raw materials received from the principal manufacturer for purposes of carrying out any manufacturing process as a job worker. Arguments advanced by the Ld. Counsel that the various Sub-rules of Rule 57F(4) would show that if the job worker was required to return the processed goods on payment of duty to the principal manufacturer, the principal manufacturer would not be required to pay duty if he chooses to remove them as such does not appear to be correct. Rule 57F(4)(ii) only speaks of removal of the intermediate products received by the manufacturer of the final products for home consumption or for export. We have also perused the earlier decisions of the Tribunal in Facit Asia and Bright Steel Mac Fabrics relied on by the Ld. DR. We are in agreement with the view taken in the said decisions that Rule 57F(2) does not envisage return of inputs after completion of processing without payment of duty. Further, it is not the case of the assessee that the process of heat treatment and stentering are not processes which do not amount to manufacture or that exemption Notification No. 214/86 exempts duty liability in the case of job-workers engaged for such activities.
8. In the above view of the matter, we find no reason to interfere with the conclusions of the authorities below. As a result, we reject these two Appeals.
P.C. Jain, Vice-President
9. I have perused the judgment proposed by my learned Brother, Shri A.C.C. Unni, Judicial Member. But I regret with respect, am unable to agree to the conclusion reached therein.
10. The appellant herein is a job-worker undertaking processes of heat-setting and stentering on fabrics received by them from their customers (modvat assessees) Under Rule 57F(4) challans. The appellants have returned the processed fabric without payment of duty thereon to their customers from whom the unprocessed fabrics were received. Contention of the appellant is that they are not required to pay any duty on the processed fabrics so received by them Under Rule 57F(4) challans. Their job was merely to undertake the aforesaid two processes and return the fabric so processed to their customers under the provisions of Rule 57F(4).
11. Revenue, on the other hand, contends that processes undertaken by the appellants results into manufacture of a new excisable commodity-processed fabric. Therefore, duty liability arises on the said commodity, unless it is exempted, and such a liability devolves on the appellant-manufacturers of the commodity. For this proposition, the adjudicating authority has relied on Tribunal's judgment in Facit Asia v. Collector . The said authority has held that the Notification 214/86-CE, applicable to intermediate goods produced by the job-workers as in this case is not applicable to the processed fabric simply because the said commodity does not figure in the relevant column pertaining to 'final product' of the table to the notification.
12. Learned advocate has assailed the aforesaid findings of the adjudicating authority. His Submission is that Rule 57F(2)d, as was considered by Tribunal in Facit Asia was in terms different from the corresponding provisions in Rule 57F(4) applicable in the present case. In order to appreciate the plea of the learned advocate, Shri V. Sridharan, I reproduce the provisions of Rule 57F(2) considered in Facit Asia and the relevant extracts of Rule 67F(4) now applicable:--
4. The point that arises for determination is whether the appellants can be taken to have complied with the requirement of Rule 57F(2) and are eligible for Modvat credit on the inputs which were removed from the factory and out of which some intermediate goods were manufactured by the job workers who cleared the same on payment of duty. For this purpose of convenience the relevant portion of Rule 57F(2) is reproduced below:
Notwithstanding anything contained in Sub-rule (1) a manufacturer, may with the permission of the Collector of Central Excise and subject to such terms and conditions and limitations as he may impose, remove the inputs as such, or after the inputs have been partially processed during the course of manufacture of final products, to a place outside the factory :
(a) for the purpose of test, repairs refining, reconditioning or carrying out any other operations necessary for the manufacture of the final products provided that the waste, if any arising in the course of such operations is also returned to the said factory; or
(b) for the purpose of manufacture of intermediate products necessary for the manufacture of the final products and return the said intermediate products to his factory, for further use in the manufacture of the final products, provided that the waste if any arising in the course of manufacture of such intermediate products is also returned to the said factory.
Provided that the said waste need not be returned to the said factory if the appropriate duty of excise leviable thereon has been paid.
57F(4) The inputs can also be removed as such or after they have been partially processed by the manufacturer of the final products to a place outside his factory under the cover of a challan specified in this behalf by the Central Board of Excise and Customs, for the purposes of test, repair, refining, re-conditioning or carrying out any other operation necessary for the manufacture of the final products or for manufacture of intermediate products necessary for the manufacture of final products and return the same to his factory within a period of sixty days or such extended period as the Assistant Commissioner of Central Excise may allow in this behalf, for--
(i) further use in the manufacture of the final product; or
(ii) removing after payment of duty for home consumption; or
(iii) removing the same without payment of duty under bond for export.
It is apparent, submits the learned advocate, that the intermediate product manufactured by the job-worker out of inputs received Under Rule 57F(4) procedure are to be returned to the Modvat assessee for three purposes:--
(i) for further use in manufacture of final product,
(ii) for removal on payment of duty for home consumption,
(iii) for export in bond without payment of duty.
13. If duty is paid by the jo b-worker on the product manufactured by him, there was no question of spelling out the purpose listed at (ii) above. If the contention of Revenue is accepted, purpose of removal of product manufactured by, and received from job-worker at the hands of the Modvat assessee on payment of duty for home-consumption becomes redundant. It is obvious, duty cannot be charged twice, once at the hands of the job-worker and again at the hands of the Modvat assessee - on the same goods. Rule 57F(2) considered in Facit Asia, was not so explicit and only two purposes listed at (i) and (iii) above in the present Rule 57F(4) were listed in erstwhile Rule 57F(2). Absence of explicit purpose, now listed at (ii) above, in the then Rule 57F(2) led the Tribunal to observe, as follows, on which the adjudicating authority has placed reliance:--
It is pertinent to note in this context that while the Rule permits removal of the inputs in respect of which Modvat credit has been taken Under Rule 57F(2) without payment of duty, it does not specifically mention that what should be the manner of clearance of the goods manufactured therefrom, at the job-workers' premises for return to the premises of the manufacturer availing of Modvat Credit. Under Section 3 of the Central Excises & Salt Act, 1944 duty is required to be paid on the goods which are produced or manufactured unless otherwise exempted under the tariff or under a notification issued under the Central Excise Act or Rule or unless removal without payment of duty is provided for under any other provisions of the Act or Rules. Under the Modvat scheme and the rules framed thereunder. there is no specific provision for any intermediate products manufactured in terms of the permission granted Under Rule 57F(2) to be cleared without payment of duty. However, exemption has been granted under Notification 214/86 to the goods manufactured on job work basis and which are used in or in relation to the manufacture of the final product. But for this notification, goods manufactured at the job workers' premises would have had to pay duty.
[Emphasis supplied by the Ld. advocate]
14. Learned advocate submits that the aforesaid emphasised observation was, and could be, made in view of the provisions of Rule 57F(2) as it then stood. Such an observation is no longer valid in view of the specific provision in Clause (ii) of Rule 57F(4) inasmuch as it envisages payment of duty (on intermediate product) at the hands of the Modvat assessee and therefore, by necessary implication, not at the hands of the job worker.
15. Learned SDR, on the other hand, urges that even now, there is no specific provision Under Rule 57F(4) for removal of intermediate goods, manufactured by the job-worker, without payment of duty. Therefore, unless there is an exemption notification, job-worker (appellant herein) would have to pay duty on goods manufactured by it, even though working Under Rule 57F(4), because it is not disputed by the appellant that Notification 214/86-CE is not applicable to the goods in question. He places reliance on Facit Asia (supra) as also on Bright Steel Mac Fabrics 69 ELT 276 relying on Facit Asia.
16. In my considered view, there is substantial force in the submission of the learned advocate for the appellant. Additional Clause (ii) in Rule 57F(4) (corresponding to erstwhile Rule 57F(2) considered in Facit Asia), by necessary implication means that duty liability on goods manufactured by a job-worker, out of inputs (as it is or partially processed) on which Modvat credit has been taken by Modvat assessee and removed Under Rule 57F(4), has to be discharged by the Modvat assessee and not the job-worker. If we do not accept this interpretation, we would be rendering the said Clause (ii) superfluous inasmuch as duty cannot be charged twice over on the same goods - once by the job-workers and again by the Modvat assessee. Observation in Facit Asia, on which the adjudicating authority relies, are no longer valid in view of the provisions of Clause (ii) of Rule 57F(4).
17. I also hold that the observations in Facit Asia, relied upon by the Revenue, were in the context of the controversy before the Tribunal. Revenue, in that case, proposed to deny the Modvat credit of duty paid on inputs to the Modvat assessee because the job worker in that case happened to pay duty on intermediate goods. Revenue's contention in Facit Asia was that the job-worker should not have paid duty on intermediate goods in terms of the then Rule 57F(2). This contention of Revenue is clear from the plea of the SDR recorded in para 3 of the said Report to the following effect:--
According to him the intermediate product from the job-worker's factory should have been brought back to the appellant's (Facit Asia Modvat-assessee) factory without payment of duty [Emphasis supplied.]
18. The aforesaid plea of Revenue in Facit Asia is again emphasised by the Tribunal when it observes in para 5 as follows:--
There is no dispute that in case duty had not been paid at the job-worker's premises there would have been no dispute as to the eligibility of the appellants to the benefit of Rule 57F(2).
19. Tribunal found as follows:--
...Revenue cannot be said to have suffered any prejudice inasmuch as whatever duty was paid at the intermediate stage, the appellant (Modvat assessee) took only that much credit on receipt of the duty paid intermediate goods and therefore, this transaction between the job-worker and the appellants was Revenue neutral.
20. It is thus clear, having regard to the pleas of Revenue and the controversy in that case, that ratio of Facit Asia is not that duty must be charged from job-worker. But the ratio is that it is immaterial to the eligibility of Rule 57F(2) [now 57F(4)], even if duty happened to be paid by the job-worker, although he was not required to pay it.
21. Revenue, in the instant case, has taken the plea contrary to what it took on the scope of Rule 57F(2) [now 57F(4) in Facit Asia. It cannot be allowed to take contrary stands in different proceedings on construction of the provisions of law. It has already been held that stand taken by Revenue in the instant case on the scope of Rule 57F(4) is wrong.
22. In view of the foregoing discussion, impugned order is set aside and appeal is allowed with consequential relief to the appellant.
POINT OF DIFFERENCE:
A.C.C. Unni, Member (J)
1. Whether in the facts and circumstances of the case, the appellant, a job-worker and receiving inputs under challans issued Under Rule 57F(4), as it existed during the relevant period, and returning the goods after carrying out the job-work undertaken by him to its customers from whom such inputs were received, is required to pay duty on such goods.
2. In view of the difference of opinion, the matter may be referred to third Member with the approval of the Hon'ble President.
P.G. Chacko
1. The appellants were job-workers engaged in the process of heat setting and stentering of fabrics falling under Chapter 55 of the Schedule to the Central Excise Tariff Act, 1985. They had received fabrics under cover of challan issued Under Rule 57F(3) till 28.2.97 and thereafter Under Rule 57F(4) of the Central Excise Rules, 1944 from various manufacturers of man-made fabrics (hereinafter referred to as 'the principal manufacturers') for subjecting the same to heat setting and stentering on job work basis. They had returned the goods so heat set and stentered in their factory, to the principal manufacturers without payment of basic Central Excise duty and Additional Excise duty. The Department wanted to treat the said process of heat setting and stentering as amounting to 'manufacture" in terms of Chapter Note 4 of Chapter 55 of the Schedule ibid, and to levy a total amount of duty (including BED and AED) of over Rs. 24 Lakhs on the said goods cleared from the appellants' factory to the principal manufacturers during the period of December, 1996 to May, 1997. The appellants contested the levy of duty so proposed by the Department. A dispute thus arose as to whether the appellants qua job workers were liable to pay duty on the heat set/stentered fabrics cleared from their factory to the principal manufacturers Under Rule 57F(4) of the Central Excise Rules during the relevant period. This dispute was adjudicated by the jurisdictional Commissioner of Central Excise, who held that duty was liable to be paid by the appellants and confirmed a demand of duty of over Rs. 24 lakhs on the goods (heat set/stentered fabrics) cleared by the appellants to the principal manufacturers Under Rule 57F(4) ibid during the aforesaid period. In the appeal filed against this order of adjudication, by the aggrieved party before the Tribunal, one of the learned Members of the Bench of the Tribunal which heard the appeals held that the appellants were liable to pay duty on the aforesaid goods during the aforesaid period and accordingly upheld the impugned order of the Commissioner of Central Excise. The other learned Member of the Bench, however, recorded a different view, holding that there was no liability for the appellants, qua job-workers, to pay Central Excise duty on the aforesaid goods returned to the manufacturers Under Rule 57F(4) ibid. On account of such difference of opinion, the matter has ultimately come up before me as Third Member.
2. I have carefully examined the records of the case. I have also perused the order recorded on behalf of the Bench by the learned Member (Judicial) and also the dissenting order recorded by the learned Vice President. Since the gist of the facts of the case has been stated in sufficient detail by both the learned Members of the Bench in their respective orders, it is not necessary for me to reproduce any of the facts.
3. I have heard the learned Advocate, Shri V. Sreedharan for the appellants and the learned SDR, Shri S. Srivastava for the respondent/Revenue. Having so heard both the sides and perused the orders recorded by both the Members of the Bench which heard the matter earlier, I observe that all the arguments advanced before that Bench by the learned Advocate and the learned SDR, as recorded in the orders of the learned Members of the Bench, have been reiterated before me. This being so, it is not necessary for me to reproduce such arguments either.
4. The issue before me is one squarely involving the interpretation of the provisions of Rule 57F in general and those of Sub-rule (4) in particular. Rule 57F deals with the manner of utilisation of the inputs and the credit allowed in respect of duty paid thereon. Sub-rule (1) provides that the inputs on which credit has been taken, may be used in or in relation to the manufacture of final products. Sub-rule (2) provides that such inputs may be removed for home consumption or for export Under bond, after intimation in writing to the jurisdictional Assistant Commissioner of Central Excise. Sub-rule (3) provides that the removal of the inputs for home consumption shall be made under cover of Rule 52A invoices and on payment of duty equal to the amount of credit taken on such inputs. Sub-rule (4), which is vital for the present case, is reproduced below:
(4) The inputs ,can also be removed as such or after they have been partially processed by the manufacturer of the final products to a place outside his factory under the cover of a challan specified in this behalf by the Central Board of Excise and Customs, for the purposes of test, repair, refining, re-conditioning or carrying out any other operation necessary for the manufacture of the final products or for manufacture of intermediate products necessary for the manufacture of final products and return the same to his factory within a period of sixty days or such extended period as the Assistant Commissioner of Central Excise may allow in this behalf, for,--
(i) further use in the manufacture of the final products; or
(ii) removing after payment of duty for home consumption; or
(iii) removing the same without payment of duty under bond for export.
5. It was under the above Sub-rule (as it stood at the material time) that the principal manufacturers supplied unprocessed fabric under cover of challans to the appellants for the purpose of carrying out the processes of heat setting and stentering on job work basis and the fabrics so processed were returned by the latter to the former for further utilisation in the manufacture of the final products. As per Clause (i) of Sub-rule (4) above, the processed fabrics so returned by the appellants could be used by the principal manufacturers in the manufacture of their final products. Alternatively, under Clause (ii) of the Sub-rule ibid, the principal manufacturers could have removed the processed fabrics (returned by the appellants) for home consumption after payment of duty or, under Clause (iii) of the Sub-rule, they could have removed the said goods without payment of duty under bond for export. As rightly pointed out by the learned advocate and rightly found by the learned Vice-President in his dissenting order, it is explicit that, in so far as the processed fabrics returned by the appellants to the principal manufacturers under Sub-rule (4) of Rule 57F are concerned, any liability for payment of duty on such goods arises only in the event of removal of such goods at the end of the principal manufacturers for home consumption vide Clause (ii) of Sub-rule (4) ibid. While Clause (iii) of Sub-rule (4) expressly provides for removal of the goods without payment of duty at the end of the principal manufacturers for export under bond, Clause (i) of the Sub-rule enables the principal manufacturers to use the said goods in the manufacture of their final products. There is no warrant, in my view, to presume that the return of the processed goods by the job-workers to the principal manufacturers against payment of job work charges under Sub-rule (4) ibid should be accompanied by payment of Central Excise duty at the job-workers' end. If it were to be presumed that the job-workers should pay Central Excise duty on the processed (heat-set and stentered) fabrics at the time of returning the goods to the principal manufacturers who had supplied unprocessed fabrics for such processing, it would mean that the same goods should suffer duty once again at the hands of the principal manufacturers, if the latter were to remove the goods for home consumption vide Clause (ii) of Sub-rule (4) ibid. But, as rightly held by the learned Vice President in his dissenting order, there cannot be double taxation on the same goods under the Central Excise Act. Therefore, I think, without the ordeal of taking aid from any of the other Sub-rules Under Rule 57F, it is possible to reach a finding that Sub-rule (4) of Rule 57F, as it stood during the material time, did not expressly or impliedly cast any burden of duty on a job-worker at the time of return of the processed inputs, under the said Sub-rule, to the principal manufacturers who had supplied unprocessed inputs to the former for job work purposes. The arguments of the learned Advocate in this behalf have to be accepted.
6. The reliance placed by the Commissioner on the decisions of the Tribunal in the case of Facit Asia Limited v. CCE, and the later decision of the Tribunal in the case of Bright Steel Mac Fabrics v. CCE and also the arguments of the learned DR relying on the said decisions of the Tribunal can hardly hold ground in view of the fact that those decisions of the Tribunal were based on Rule 57F (2) as it stood during the period of dispute in those cases and that the present Rule 57F (4) as it stood during the period of dispute in the present appeals is materially different from the aforesaid Rule 57F (2) in vital aspects. Further the decision of the Tribunal in the case of Facit Asia Limited (supra) was not on the issue as to whether a job-worker was liable to pay duty on goods returned after processing by him to the principal manufacturer of final products for the purpose of further use of such processed goods in the manufacture of such final products in terms of Rule 57F (2) as it stood at that time. The said decision was rendered on a question touching availment of Modvat credit. The learned Vice-President has, in his dissenting order, clearly drawn the subtle distinction between the aforesaid case of Facit Asia Limited and the present case. The learned Advocate has also drawn my attention to this position of the matter. I see no reason to disagree with the learned Vice-President's views in regard to Facit Asia Limited (supra).
7. The learned DR has, after reiterating the department's arguments already advanced before the Bench in the appeals earlier, stressed the point that as long as the processed goods in question were not exempted from duty under any Notification issued Under Section 5A of the Central Excise Act, the said goods would be exigible to duty since, according to him, the aforesaid process of heat-setting and stentering of fabric amounted to 'manufacture' within the meaning of this term Under Section 2(f) of the Central Excise Act. He has attempted to draw support for this submission from the decision of the Hon'ble Supreme Court in the case of Bombay Oil Industries Private Limited v. Union of India and has drawn my attention, particularly, to Para 10 of the Apex Court's judgment. But, I observe, the question which was considered by the Apex Court in the said Para 10 was whether Notification No. 168/78 dated 2.9.78 issued Under Section 25 (1) of the Customs Act, 1962 was clarificatory to the earlier Notification No. 141/76 dated 2.8.76. I do not find anything in the said Para 10 of the Apex Court's judgment to support the Revenue's case instantly. The learned DR has further taken my attention to two other decisions of the Apex Court, namely, (i) Novopan India Limited v. Collector of Central Excise and Customs, Hyderabad and (ii) Liberty Oil Mills Private Limited v. CCE, Bombay . Both these decisions of the Apex Court were to the effect that any ambiguity or doubt in an exemption provision should be resolved in favour of the Revenue and not in favour of the assessee. The Apex Court had so held while considering the scope of exemption Notifications issued Under Section 5A of the Central Excises and Salt Act, 1944 and Under Section 25 of the Customs Act, 1962. These decisions of the Apex Court, again, do not seem to advance the Department's case in the instant appeals any further. This is because the issue at stake is not one relating to interpretation of any exemption Notification issued, or deemed to have been issued, by the Central Government Under Section 5A of the Central Excise Act. The issue under consideration, on the other hand, is one involving the construction of the provisions of Sub-rule (4) of Rule 57F of the Central Excise Rules, 1944, and nothing more.
8. In his rejoinder, the learned Advocate has further relied on two subsequent decisions of the Tribunal cited below:--
(I) Motor Industries Company Limited v. CCE, Aurangabad [In this case, the Tribunal held that no duty was required to be charged on the goods manufactured Under Rule 57F(2) of the Central Excise Rules and that it was wrong to hold that a job-worker conducting activities Under Rule 57F(2) was required to observe Central Excise formalities and pay duty on such goods.] (II) Tegga Limited v. CCE, Calcutta 1999 (33) RLT 821 (CEGAT) - [In this case, the principal manufacturer had supplied two intermediate products viz. rubber compound and rubber adhesives to the job-worker, and the latter adhered the two into one product and sent the same back to the former [who were the appellants in the case], for the manufacture of final product. The Tribunal held that duty was not demandable on the rubber adhesives on the ground that it was a fully finished product.]
9. On a perusal of these two decisions of the Tribunal, I do not find anything in the Tribunal's order in the case of Tegga India Limited (supra) to support the appellants' case at present, though in the other case of Motor Industries Company Limited (supra) cited by the learned Advocate, the Tribunal's view that a job-worker conducting activities Under Rule 57F(2) (as this Rule had stood at the relevant time) was not required to observe Central Excise formalities and pay duty on the goods processed and returned by him to principal manufacturer, does lend some support to the arguments of the learned Advocate for the appellants in the present appeals.
10. For the reasons already recorded by me, I am in complete agreement with the view taken by the learned Vice-President in his dissenting order, holding that the appellants (job-workers who received inputs from principal manufacturers under challans issued Under Rule 57F(4), as this rule stood during the relevant period, and returned the said goods after carrying out the process of heat-setting and stentering on job-work-basis to the principal manufacturers) were not required to pay duty on the goods so returned during the period in question.
11. The point of difference placed before me is answered as above. Registry shall take appropriate follow-up action forthwith.
ORDER In view of the opinion of the majority, the impugned order is set aside and appeal allowed with consequential relief to the appellants.