M/S. World Famous Clothing Company vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-156/2007/AHD-I dated 30.03.2007, passed by Commissioner (Appeals) Central Excise & Service Tax, Ahmedabad)

M/s. World Famous Clothing Company : Appellant (s)

VERSUS

Commissioner of Central Excise & S.T., Ahmedabad : Respondent (s)

Appeal No. : E/791/2007

Commissioner of Central Excise & S.T., Ahmedabad : Appellant (s)

VERSUS

M/s. World Famous Clothing Company : Respondent (s)

Represented by :

For Assessee (s) : Shri Paritosh Gupta, Advocate For Revenuet : Shri Alok Srivastava, Authorised Representative

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Hon'ble Member (Technical)

Date of Hearing / Decision : 12.08.2015

ORDER No. A/11204-11205/2015 Dated 12.08.2015

Per : Mr. P.K. Das;

The relevant facts of the case, in brief, as revealed from the show cause notice dated 20.07.2004 that M/s. World Famous Clothing Company (i.e. the Assessee) had sent fabrics for stitching on job work basis to various job workers and have received back ready made garments from them. The job workers issued bills to the assessee and payments were made. It has been alleged that in terms of Rule 4(1) and (3) of the Central Excise Rules, 2002, the onus of payment of Central Excise duty falls on the person who sent the fabrics and gets ready-made garments manufactured on job work basis, provided that job worker has not exercised option and undertaken to discharge all the liabilities and complied with all the provisions of the Rules. The adjudicating authority confirmed the demand of duty of Rs. 2,67,516/- alongwith interest for the period 2003-04and imposed penalty equal amount of duty, under Section 11AC of the Central Excise Act, 1944. By the impugned order, the Commissioner (Appeals) upheld the demand alongwith interest and set-aside the penalty imposed under Section 11AC of the Central Excise Act, 1944. The assessee filed appeal against the demand of duty alongwith interest. Revenue filed appeal against setting aside of penalty.

2. After hearing both the sides and on perusal of the records, we reproduce below the relevant portion of Rule 4(1) and (3) of Central Excise Rules, 2002, issued by Notification No. 4/2002-CE (NT) dated 01.03.2002:-

Rule 4. Duty payable on removal. - (1) Every person who produces or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty leviable on such goods in the manner provided in rule 8 or under any other law, and no excisable goods, on which any duty is payable, shall be removed without payment of duty from any place, where they are produced or manufactured, or from a warehouse, unless otherwise provided:

Provided that the goods falling under Chapter 61 or 62 of the First Schedule to the Tariff Act, produced or manufactured by a job work, may be removed without payment of duty leviable on such goods under sub Rule (3), such duty shall be paid by the job worker on the date of removal of such goods from his registered premises registered under Rule 9.

(2) . 

(3) Notwithstanding anything contained in sub-rule (1), every person who gets the goods, falling under Chapter 61 or 62 of the First Schedule to the Tariff Act, produced or manufactured on his account on job work, shall pay the duty leviable on such goods, at such time and in such manner as may be specified under these rules, whether the payment of such duty be secured by bond or otherwise, as if such goods have been manufactured by such person;

Provided that such person may authorise the job worker to pay the duty leviable on such goods on his behalf and the job worker so authorised undertakes to discharge all liabilities and comply with all the provisions of the rules.

3. By Notification No. 24/2003-CE (NT) dated 25.03.2003, explanation of sub-Rule (1) and sub-Rule (3) of Rule 4 shall be omitted. Accordingly, after the amendment to Rule 4, the assessee herein is not liable to pay duty on the goods cleared by job workers.

4. On perusal of the adjudication order it is seen that the adjudicating authority proceeded on the basis that the job workers are hired labourers and the assessee herein, is manufacturer of the goods and liable to pay duty as per the provisions of Section 2(f) of the Central Excise Act, 1944. We are unable to accept such a finding of the adjudicating authority for the reason that there is no allegation in the show cause notice that the job workers are hired labourers. In any event, it is clearly coming out from the show cause notice that the appellant sent the material to the job workers, who issued the bills to the assessee. So, there is no material available that the job workers were the hired labourer of the assessee.

5. In view of the above discussion, the demand of duty alongwith interest can not be sustained. Accordingly, the demand of duty and interest is set-aside and the appeal filed by the assessee is allowed. The appeal filed by the Revenue is rejected. Application for extension of stay order filed by the assessee is dismissed as infructuous.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial) ..KL

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