The New Delhi bench of the Custom, Excise & Service Tax Appellate Tribunal (CESTAT) held that the independent manufacturer is liable to pay Central Excise Duty on the marble slabs manufactured on a job work basis. The CESTAT directs the original adjudicating authority for Re-adjudication.
Sonex Marmo Grani Pvt Ltd, M/s Divyam Marble Udyog and M/s Sonex Marble Pvt Ltd, the assessees were engaged in sawing marble blocks on a job work basis but did not maintain any record for goods sent or received. They were eligible for Small-Scale Exemption Notification No.08/2003-CE dated 01.03.2003, but the small-scale exemption was not available from 2014-15.
The Show Cause Notice was adjudicated on the contest, confirming the central excise duty liability of Rs. 1,66,07,824/- for the period 2012-13 to 2015-16, with interest and equal penalty imposed. The assessees were liable to pay Central Excise duty on marble slabs manufactured on a job-work basis, and the value of clearances exceeded the prescribed limit.
The assessees filed an appeal against the order dated 28.02.2019 of the adjudicating authority, which was allowed by the Commissioner (Appeals) on grounds of natural justice, incorrect valuation of job worked slabs, incorrect calculation of own turnover, and wrongly imposed penalty @100% of duty amount. The appellant disputed the quantity of marble slabs calculated by Revenue, as it was of irregular shape and the court ignored Rule 11 of the Central Excise Valuation Rules 2000. Valuation should be the cost of raw material+job charges.
The Commissioner (Appeals) held that the assessees were not liable to pay duty on green marble slabs manufactured on a job basis, as they had returned the slabs to the principal manufacturer. The Commissioner (Appeals) held that the principal manufacturers were not eligible for SSI exemption and that the benefit of Notification No. 84/94-CE is available to job workers. Revenue’s method of valuation is erroneous and not tenable, and most principal manufacturers have cleared regular finished and polished green marble slabs @ Rs. 25 per square ft.
The counsel for the Appellant Sri.O.P.Bisht supported the findings of the adjudicating authority and submitted that none of the suppliers of raw material worked under job work procedure of Central Excise and that the Assessees as an independent manufacturer were liable to pay Central Excise duty on the marble slabs manufactured by him on job work basis.
Valuation of the goods manufactured by the Appellant on a job work basis was required to be worked out in terms of Rule 10A(ii) of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000.
The Job worker is the manufacturer and the raw material supplier is not the manufacturer if the relationship is principal to principal basis. Duty must be demanded from the job worker, not the principal manufacturer, when the transaction is on principal to principal basis.
Bipin Garg, counsel for the assessee, supported the appellate authority’s findings that the Assessees were job workers who were not required to pay duty. The principal manufacturers were not liable to pay the duty, as they were working under Small Scale Exemption Notification No. 08/2003-Ce dated 01.03.2003.
Issues for consideration include whether duty liability is of the job worker or supplier of inputs, whether the respondent was covered by the exemption, and whether wrong availment of the benefit of SSI exemption Notification No. 08/2003-CE and Notification No. 83/94-CE, 84/94-CE or 214/86-CE resulted in non-payment of duty.
The two-member bench comprising of Anil Choudhary (Judicial) and Hemambika R. Priya (Technical) observed that the process of cutting or sawing or sizing stone blocks into slabs or tiles amounts to manufacture and is eligible for levy of excise duty.
It was held that Job workers are liable to pay duty as they are carrying out manufacturing activity independently, even if raw materials and designs were given by the appellant.
While allowing the appeal and cross-objections the court directed the matter to the original Adjudicating Authority for re-adjudication of appeals and cross objections, recalculation of SSI exemption, reduced penalty amount, and opportunity of hearing within 45 days.
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