Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/CASE LAW/2015-16/2582

Whether clearance of own finished goods manufactured by job-worker against inputs received for job work legally valid

Case:NATIONAL CONDUCTOR VERSUS COMMR. OF C. EX. & SERVICE TAX, DAMAN
 
Citation:2014(306) E.L.T 635 (Tri.-Ahmd.)

 
Brief Facts:These two appeals are directed against O-I-A No. SRP/111-112/DMN/SDMN/2011-12, dated 5-9-2012. Since the issues involved in these two appeals arise out of the same impugned order, they are being disposed of by a common order.
The facts of the case in brief are that during the course of preventive checks in the appellant’s unit it was observed that the appellants had received goods from their principal manufacturers for carrying out job work. The appellants, instead of clearing goods manufactured out of the said raw materials received from their principal manufacturers, cleared their own manufactured finished goods under the cover of job work challans to the principal manufacturers during period from 15-5-2007 to 1-11-2007. A SCN dated 21-7-2011 was issued to the appellants demanding duty of Rs. 12,66,230/- under Sec. 11A of Central Excise Act, 1944 (hereinafter referred to as ‘CEA’) on their own challan along with interest under Sec. 11AB of CEA and imposition of Rules, 2002 (hereinafter referred as ‘CER’) on the grounds that goods cleared without payment of duty. Vide the impugned order, the adjudicating authority confirmed the entire demand along with interest and imposed penalty of Rs. 12,66,230/- on the appellant under Sec. 11AC of CEA read with Rule 25 of CER. Penalty of Rs. 3,17,000/- was also imposed on Shri Dilip C. Modi, partner of the appellant firm under Rule 26 of CER.
Aggrieved by such an order, the appellant preferred the appeal before the First Appellate Authority. The First Appellate Authority after considering the issue raised before him in the personal hearing as well as grounds of appeal, upheld the OIO in respect of the main appellant M/s. National Conductors but reduced penalty on the individual partner of main appellant.
 
Appellant Contentions:Learned Advocate appearing on behalf of the appellant gave an overall picture of the functioning and the issue in hand. It is his submission that the appellant M/s. National Conductor had received broken and used copper wire from their client under job work challan as per Rule 4(v)(a) of Cenvat Credit Rules, 2004 for conversion into copper rods. It is his submission that the appellant has sent this used copper wire for further job working by following the procedure and received back the same and use them for converting into copper rods. It is his submission that when the Departmental officers visited, the partner of the appellant had specially stated that due to exigency/emergency at the end of the persons who had sent materials for job working, they had cleared their own finished goods which was incidentally the same i.e., copper rods. It is his submission that subsequently the appellant had discharged Central Excise duty on the copper rods which were cleared by them, which were manufactured out of job worked items. It is his submission that there was no evidence of corroborative nature to prove that there has clandestine removal of goods as the finished goods was sent back to main principal manufacturer under job work challan. It is also his submission that when the investigation took place in November, 2007, panchnama, statements were recorded on the same date but show cause notice was issued on 21-7-2011 hence demand cannot sustained for extended period. He would submit that at the most, the appellant can be held to have violated the procedures but for that purpose there cannot be any demand of duty by invoking extended period. For this proposition, he would rely upon the following decisions :
  (i)        M/s. Castwell Metal Industries - 2001 (137) E.L.T. 161
 (ii)        M/s. Uniworth Textile Ltd. - 2013 (288) E.L.T. 161              
(iii)        CCE, Mangalore v. Pals Microsystems Ltd. - 2011 (270) E.L.T .305
(iv)        M/s. Prashant Electrodes - 2006 (196) E.L.T. 297.
It is his submission that demands be set aside and their appeals be allowed.

Respondent Contentions:Learned Departmental Representative on the other hand drew attention to the findings recorded by the adjudicating authority as well as First Appellate Authority. It is his submission that partner of the firm has accepted that they have cleared their own finished goods, manufactured by them under the job work challan.

Reasoning of Judgment:CESTAT have considered the submissions made at length by both sides and perused the records. It was found that the only issue that arises for consideration is whether the main appellant National Conductors could clear finished goods manufactured out of their own raw materials without payment of duty under job work challans.
There is no dispute as to the facts that the appellant had cleared finished goods manufactured out of their own raw material as job work items under job work challans. In Tribunal’s view, the lower authorities were correct in holding that the appellant should discharge the duty liability as the procedure for functioning under the job work is different and clearance of finished goods manufactured in the appellant’s factory from his own raw materials is different. It is statutory requirement that the appellant should record all the production that took place in his factory premises out of his own raw materials in the statutory books of account which were not done so, as it is undisputed that the appellant had cleared the finished goods manufactured out of his own raw materials to their clients. In Tribunal’s considered view, record to be maintained by the appellant for the materials received for job working would show the balance of raw materials while finished to be manufactured were already dispatched. The provisions of job work scheme is totally different, needs to be followed in a manner prescribed which has been not done by the appellant.
Another argument of the learned Advocate as regards Revenue neutrality has to be also discarded as the question of Revenue neutrality would arise only when the activities of clearance takes place within the sister concern or their own units.
As regards the reliance placed by the learned Counsel on the various judgments, It was found that the facts in those judgments were totally different than the facts as mentioned in this case. Hence, the said ratio of the judgments may not applicable in these cases.
In Tribunal’s considered view and foregoing reasons, there are no merits in the appeal. The impugned order is upheld and appeals are rejected.
 
Decision:Appeal Rejected.
 
Comment:The crux of this case is that Job worker cannot clear their own finished goods without payment of duty under job work challan. It was correctly concluded by the Tribunal that appellant should discharge the duty liability as the procedure prescribed for functioning as job-worker because the procedure under the job work is different and clearance of finished goods manufactured in the appellant’s factory from his own raw material is different. Apart from this, appellant need to maintain separate accounts for receiving material from Job work and manufacturing own finished goods.

Prepared by: Hushen Ganodwala

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com