Customs, Excise and Service Tax Appellate Tribunal

Orion Steel Corporation vs. C.C.E Vadodara-Ii

MANU/CS/0001/2021

13.01.2021

Excise

Ownership of goods is immaterial for the purpose of fixing duty liability

Present Appeal has been filed against confirmation of demand of Central excise, Interest and Imposition of Penalty. Learned Counsel for the Appellant submits that, the Appellant Company is engaged in manufacture of welding electrodes on job work basis and pointed out that, these electrodes carried the brand name ("Sun Arc") which belonged to the Appellant. He submits that, the case of the Department is that, the electrodes manufactured by Orion Wire Manufacturing Company bear the brand name of the Appellant's company, Clearance of such welding electrodes have to be included in the aggregate clearances of the appellant for the purpose of Notification No. 8/2003 -CE. The demand of duty has been calculated in the above manner by including the value of clearance of the goods manufactured by Orion Wire Manufacturing Company in the total clearances of the Appellant.

The Appellant is the owner of the brand name "Sun Arc". They are getting electrodes manufactured by the Orion Wire Manufacturing Company on job work basis by supplying materials to them. The electrodes manufactured by the job worker are cleared from the job worker premises directly. Raw materials for the manufacture of the electrodes are supplied by the Appellant. The duty on the electrodes is paid by the job worker on the price at which the goods are sold by the Appellant to the buyers. The Value Added Tax is paid by the Appellant. Retail invoices are also issued by the Appellant in respect of this clearance from the Job premises. The revenue is seeking to club the clearance made from the job worker premises into the clearances of the Appellant for calculating the benefit of SSI Exemption available to the Appellant. Notification No. 8/ 2003-CE grants duty exemption to clearance made by small scale units. This notification provides exemption to first clearances upto an aggregate value not exceeding Rs.100 lakhs made on or after 1st day of the April of any financial year. This exemption is subject to the condition that, the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories, or from a factory by one or more manufacturers does not exceed (rupees four hundred lakhs) in the preceding financial year.

The larger bench of Tribunal in case of Thermax Babcock & Wilcox Ltd. vs. Deputy Commissioner of Income Tax has clearly held that, the job worker being the manufacturer of goods is liable to pay duty on goods manufactured by him albeit on job work. The ownership of the goods is immaterial for the purpose of levy of duty and thus, any person who has undertaken the activity of manufacture is liable to pay duty. In order to save the job worker from payment of duty, the principal manufacturer has to own the liability to pay such duty. It is only by virtue of the Notification No. 214/86-C.E., dated 25th March, 1986 that the liability of the job worker to pay duty is transferred to the principal manufacturer who undertakes to pay duty.

It is apparent that, the Appellant cannot be held to be manufacturer of goods and the job worker is the manufacturer in the facts of present case. The liability to pay duty arises at the end of the job worker and not at the end of the Appellant although Appellant is the supplier of the raw materials. It is also clearly held in the case of Thermax Babcock & Wilcox Ltd. vs. Deputy Commissioner of Income Tax that, ownership of goods is immaterial for the purpose of fixing duty liability. Moreover, in the facts of present case, none of the provisions of Notification 8/2003-CE are attracted which can enable revenue to include the value of clearances of goods manufactured by the job worker in the aggregate value of the clearances of the Appellant. There is no substance in the argument of the revenue to hold that, Appellant are the manufacturer and the benefit of the Notification 8/2003-CE can be denied by including the value of clearances of goods manufactured by the job worker in the aggregate clearances of the Appellant. The impugned order is set aside. Appeal allowed.

Tags : Demand Confirmation Legality

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