Customs, Excise and Gold Tribunal - Mumbai
Nataraj Ceramic And Chemical ... vs Commissioner Of Central Excise And ... on 29 October, 2003
Equivalent citations: 2004(164)ELT111(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Natraj Ceramics & Chemical Inds. Ltd. was supplied quantities of raw bauxite to be calcined by it on job work and subsequently to such job work to be purchased by it. The agreement dated 1.8.1996 between Natraj Ceramics & Chemical Inds. Ltd. and Giriraj Calcine Bauxite & Refractories Pvt. Ltd., the supplier of the raw bauxite makes this position clear. Natraj Ceramics & Chemical Inds. Ltd. (hereinafter referred to as the job worker) after calcining the bauxite did not pay duty on it. It utilised the bauxite in its factory in the manufacture of fire bricks and other excisable goods and therefore claims the benefit of the exemption contained in 67/95, which exempts from duty captively consumed goods. Notice was issued to both the job worker and supplier demanding duty on the ground that the benefit of the exemption contained in 67/95 would not apply as the job worker was not the owner of the bauxite. Penalty was proposed on both persons and also on Ashok Kumar, the manager of the job worker and Jayesh Kanani, the director of supplier. Adjudicating on the notice, the Commissioner said that what was really the issue was not the ownership of the bauxite for availing the exemption but said mat there has been an attempt by both parties not to pay duty payable on the calcined bauxite by entering into this arrangement. He therefore confirmed the demand and imposed penalty.
2. The contention of the common counsel for the appellants is that what was done by the parties was not contrary to law. There is no requirement in notification 67/95 that the job worker must own the goods upon which he undertakes by process. The Commissioner has in fact admitted this and gone on a completely different ground which was not set out in the notice. The Commissioner's reasoning is flawed. There has been no loss whatsoever to the department. Had the job worker purchased the raw bauxite and utilised it after calcining it in its factory the benefit of the exemption would still be available. He also questions the applicability of the extended period of limitation. The departmental representative reiterates what the Commissioner has said.
3. When once the Commissioner has accepted that the ground set out in the notice the absence of the ownership of the goods by the job worker was not a part of the notification he could not now set up a fresh case against the parties concerned. They would have had no occasion to meet it. Even apart from this we do not find merit in the case that the Commissioner has set up. His view is that the supplier of the raw bauxite had availed of exemption contained in notification 214/86 and the job worker the exemption contained in 67/95 and they have thereby denied the department the duty due. It is not in dispute that raw bauxite was exempted from duty by notification 5/99 dated 28.2.1991 and hence Giriraj Calcine Bauxite & Refractories Ltd. was not liable to pay duty on it. We do not see how notification 214/86 applies in the situation of facts before us. The notification exempts from duty goods manufactured as job work subject to the supplier of the raw material or the semi finished goods undertaking that they would be used in the factory for manufacture of final product, or removed without payment of duty under bond for export or removed on payment of duty for home consumption from its factory and used for purpose specified in the notification by another job worker. The notification thus clearly provides for exemption to be availed of by a supplier of raw material or intermediate products which after processing, would be disposed of in any of the manner specified in it. The claim to it is optional, and the owner of raw material has not exercised it. If the job worker before us had purchased the raw bauxite and calcined it, the benefit of the notification 87/95 would be available to it. It appears that rather peculiar method of first conducting job work and purchasing later was arranged in order to avoid payment of sales tax. Whatever that position, there was nothing contrary to Central Excise law in what has been done and nothing that has resulted in the loss of revenue to the department. We have therefore not dealt with the argument in this issue.
4. Appeal allowed. Impugned order set aside.