Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  GST registration cancellation without reasons amounts to ‘Economic Death’ of business: Supreme Court. *  No GST refund if appeal before GSTAT is filed late: Gujarat High Court. *  Mere upload of GST notice on portal not valid service, appeal limitation won’t start: Punjab & Haryana High Court. *  Taxpayer can’t be penalised for missing notices hidden under ‘Additional Notices/Orders’: Calcutta High Court allows fresh adjudication. *  State tax officer can’t issue GST SCN beyond CBIC-assigned jurisdiction: Bombay High Court stays recovery proceedings. *  Earlier 7.5% Pre-Deposit must count towards mandatory 10% for Appeal: Uttarakhand high court quashes CESTAT Order. *  Third Parties can’t challenge GST Advance Rulings merely due to financial impact: Karnataka HC *  GST SCN generated using AI tool quashed: Punjab & Haryana High Court *  Bank Attachment Quashed as Madras HC Quashes GST Order Issued Against Deceased Person *  ITC Blocking Order for Failure to Record ‘Reason to Believe’ U/R 86A Quashed: Allahabad High Court *  Govt Extends GSTAT Appeal Filing Deadline From 30 June to July 31, 2026 *  GST Demand on RWA Stayed: Allahabad High Court Questions Taxability of Electricity Distribution to Flat Owners *  CBIC Clarifies Jurisdiction After GST Registration Transfer: Earlier Proceedings Remain Valid, New Officer to Continue Action *  GST authorities’ certification not mandatory for reimbursement, but tax payment must be proven: Karnataka HC *  Contractor can’t seek gst reimbursement through writ when contract has arbitration clause: Karnataka HC *  Unsigned Order Is No Order in Law: AP HC Quashes GST Assessment Order for Want of Officer’s Signature *  Customs Can’t Levy Rs. 1.36 Crore Cost Recovery Charges Without Proof of Full-Day Officer Deployment: CESTAT  *  12% IGST Payable On Imported Dialysis Machine Parts: CESTAT *  Bombay High Court Admits Challenge to GST Limitation Extension Notifications; Grants Protection Against Coercive Recovery *  Criminal Case Can’t Run Parallel to GST Proceedings on Same Facts: Allahabad High Court *  Allahabad High Court Stays GST Detention Order; Directs Release of Vehicle and Goods on Deposit of Rs. 1.44 Lakh *  Service Tax Can’t Be Levied on Loss-Making Contracts: Gujarat High Court *  GSTN Mandates Ship-to GSTIN in e-Invoice and e-Way Bill APIs; Introduces Voluntary e-Way Bill Closure Facility from August 1, 2026 *  GST Appeal Can’t Be Rejected as Time-Barred When Taxpayer Was Pursuing Rectification Remedy: Telangana High Court *  Absence of E-Way Bill and Transport Documents Justifies Customs Seizure U/s 110: Gauhati HC *  Madras High Court Upholds GST Late Fee and Penalty for Non-Filing of Annual Return, Dismisses Challenge  *  GST Records, Purchase Documents Sufficient to Discharge Burden Under Customs Act: CESTAT Orders Release of 3.65 Kg Gold  *  No Sugar Cess Payable on Sugar Exported Out of India: CESTAT *  Road Construction Services Exempt and SCN Time-Barred: CESTAT Quashes Service Tax Demand Based Solely on Form 26AS  *  ITC Freeze Upheld After GST Dept Find Suppliers Were Allegedly Fake Bill-Trading Entities: Madras HC 
Subject News *  Input service benefits can’t be denied: CESTAT allows export refund despite MMTC acting as Canalising agency. *  No service tax demand without proof of service of SCN: CESTAT. *  Service tax demand quashed as dept. fails to prove service of SCN: CESTAT *  GST : Mere allegation of inadequate consideration of reply not enough to invoke writ jurisdiction: Delhi High Court *  Onerous conditions imposed for provisional release of seized imported goods shouldn’t amount to virtual denial of relief: CESTAT. *  GST SCN without alleging fraud cannot invoke sec. 74: Karnataka High Court quashes adjudication order. *  Extended Limitation Can’t Be Invoked Merely on Form 26AS Data: CESTAT *  Revenue-Sharing with Restaurants Not Taxable as Business Support Service: CESTAT *  R. 6(3) Option Can’t Be Forced on Taxpayer; CESTAT Quashes Rs. 12.36 Crore CENVAT Credit Demand *  Excise Duty | Power Consumption Alone Can’t Prove Clandestine Manufacture: Karnataka High Court *  Madras High Court Examines DGGI’s Authority to Issue GST Penalty Orders Under Section 122, Adds DGGI as Party *  Proceedings under omitted r. 96(10) can’t survive without saving clause: andhra pradesh high court quashes gst refund recovery *  Excise duty power consumption alone can’t prove clandestine manufacture: karnataka high court *  Madras high court rules GST show cause notices must disclose grounds for invoking extended limitation *  Court Can’t Direct Extension GST Return Deadlines or Waive Interest and Penalties: Karnataka High Court *  GST Notifications Can’t Go Beyond GST Council Recommendations: Madras High Court Quashes SCN on Branded Pulses *  Appeal Can’t Be Dismissed for Delay When Dept’s Own Order Mis-states Limitation Period: CESTAT *  No Evidence of KYC or Due Diligence Breach By Customs Broker: CESTAT Quashes Licence Revocation in Export Overvaluation Case *  Glucometers Are Chemical Analysis Instruments Classifiable Under Tariff Heading 9027: CESTAT *  Validity of Post-GST Service Tax Proceedings Upheld: Gujarat High Court Dismisses Challenge to S. 73 SCN *  Rectified GST Refund Applications Can’t Be Rejected as Time-Barred If Original Refund Claim Was Filed Within Limitation: Gujarat HC *  Service Tax Refund Can’t Be Denied as Time-Barred When Levy Itself Is Unconstitutional: Gujarat High Court *  Same Officer Can’t Act As Auditor & Adjudicator: Karnataka High Court *  Karnataka High Court Condones 324-Day Delay, Revives Customs Appeal in Jewellery Pilferage Case  *  Madras High Court Quashes GST Assessment Order Passed Ex Parte Despite Prior ITC Reversal; Lifts Bank Attachment *  Tobacco Process Doesn’t Amount to Manufacturing: Madras High Court Quashes Rs. 1.32 Crore Compensation Cess Demand  *  Recovery Notice Unsustainable After Voluntary Reversal of Unutilised Credit: CESTAT  *  GST | ‘System Generated’ SCN Without Officer Details Invalid: Allahabad HC  *  Electronic Records Without Statutory Certification Requirements Can’t Justify Undervaluation Allegations: CESTAT *  Madras High Court Stays GST Order, Finds Prima Facie Merit in Plea Against S. 74 Proceedings Based on S. 73 Intimation  

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