Order Date – 30 June 2023

Parties: COMMISSIONER, CENTRAL EXCISE & CGSTJODHPUR 1 Vs KHEMANI METAL INDUSTRIES PRIVATE LIMITED, SHRI R A KHEMANI, DIRECTOR & SHRI DHEERAJ GANDHI, MANAGER

Facts – 

• The Respondents, Khemani Metal Industries Private Limited, are manufacturers of Stainless steel cold rolled patta/ patti. They were paying the duty on the finished goods manufactured by them and they were not availing the cenvat credit on the goods so used in the manufacture and input services utilized.
• It was alleged that the respondent 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.

Issue –

• Whether the respondent is exempted from payment of duty under Notification No. 214/86-CE dated 25.03.1986?

Order –

• The Tribunal observed that in the present case, the stainless steel Patta-Patti 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.
• 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.
• The Tribunal’s decision in the case of Thermax Babcock & Wilcox Ltd. vs CCE Pune I, held in no uncertain terms 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. In such circumstances, it was held therein that job worker automatically is the manufacturer and therefore liable to pay duty irrespective of the ownership of the said goods.
• As regards the other appeals filed by the Director and the Manager of the company to assail the imposition of penalty on the two, it may be pointed out that in view of the aforesaid discussions question of imposition of penalty in the matter does not survive.
• Hence, the order of the learned Commissioner is not riddled with any infirmity and therefore, the appeals filed by the Revenue deserve to be dismissed.

Central excise act