The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that the Principal Manufacturer not filing requisite undertaking jurisdictional authority, job worker liable to pay excise duty.
The respondents, Khemani Metal Industries Pvt Ltd, are manufacturers of Stainless steel cold rolled patta/ patti falling under Tariff heading 7219 9090 of the Central Excise Tariff Act, 1985. They were paying the duty on the finished goods manufactured by them by cold rolling process with the aid of cold rolling machines in terms of Rule 15 of the Central Excise Rules, 20022 read with Notification No. 17/2007-CE dated 01.03.2007.
The Revenue has, made out this case stating that the assessee was liable to discharge central excise duty on the stainless steel circles and stainless steel scrap as the assessee was a manufacturer and only job worker were exempted from payment of duty under Notification No. 214/86-CE dated 25.03.1986. It was, therefore, incumbent upon the respondent-assessee to discharge the legal obligation and clear the goods on payment of appropriate central excise duty.
It may be pertinent to indicate that exemption to job workers from payment of duty is conditional under Notification No. 214/86- CE dated 25.03.1986 and based on filing of the undertaking by the Principal manufacturer. This cannot be held to be a mere procedural requirement.
However, as in the present case, the stainless steel PattaPatti cleared by the respondents was duty paid and no Cenvat credit have been availed on the raw material required for the manufacture of stainless steel Patta-Patti, therefore, they were under no obligation to ensure duty payment on goods manufactured by the job worker.
A Two-Member Bench of the Tribunal comprising Justice Dilip Gupta, President and Hemambika R Priya, Technical Member observed that “In a case where a principal manufacturer did not file the requisite undertaking to the jurisdictional authority in terms of Notification No. 214/86, it is evident that the principal manufacturer had no intention to pay the duty on the final product and the job worker was liable to pay the duty on the goods manufactured.”
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