The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a company is not liable to pay excise duty if job workers are independent contractors/manufacturers.
M/s. Comet Technocom Pvt. Ltd, the assessee sent materials to diverse job workers for the manufacture of the final product. Only inspection of the finished goods was carried out at the premises of the assessee. If the job workers are proven to be the agents of the assessee who work under their supervision and control, then the assessee is the real manufacturer and not the job workers.
On the other hand, if the job workers are proven to be independent contractors with little or no supervision by the assessee then they are the manufacturers and the liability of paying excise duty is with them.
The Commissioner of Central Excise has reproduced the outcome of the cross-examination of 7 job workers of the assessee company wherefrom it would be evident that such job workers were independent manufacturers having their independent man and machinery for the manufacture of the goods.
It was submitted that the assessee company i.e. M/s Comet Technocom (P) Ltd, had no supervision or control in such processes of manufacture apart from the supply of raw materials and visits through their employees for the purpose of counting of materials and verification of quality after manufacture. The said job workers further stated that they used to inform the assessee company herein after completion of manufacture of the goods only.
It was held that it was evident from the fact that the job workers in question were independent manufacturers having little or no supervision by the assessee company herein.
The two-member bench of P.K Choudhary (Judicial) and K. Anpazhakan (Technical) has observed that the job workers of the assessee company were independent contractors/manufacturers and hence, the assessee company and/or its directors cannot be saddled with any liability of payment of excise duty and/or consequential penalty concerning the goods so manufactured by the said job workers.
The bench allowed the appeal with consequential relief to the assessee company and its directors Further rejected the Revenue and cross objection filed by the Respondent assessee.
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