Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/CASE LAW/2014-15/2447

Whether job worker can be made liable for duty liability if procedure under Rule 4(5)(a) is followed?

Case:-VANDANA DYEING PVT. LTD. Versus COMMISSIONER OF C. EX., MUMBAI-III
 
Citation:-2014 (307) E.L.T. 528 (Tri. - Mumbai)
 

Brief facts:- The appeal is directed against Order-in-Appeal No. AT/M-111/53/04, dated 30-8-2004 passed by the Commissioner of Central Excise (Appeals), Mumbai-III. Vide the impugned order, the learned appellate authority has upheld the confirmation of duty demand of Rs. 4,11,801/- along with interest thereon and also imposing equivalent amount of penalty on the appellant, M/s. Vandana Dyeing Pvt. Ltd., Mumbai.
The facts of the case are that the appellant M/s. Vandana Dyeing Pvt. Ltd., received fabrics falling under Chapters 52, 54, 55 and 58 of the Central Excise Tariff under Rule 4(5)(a) of the Cenvat Credit Rules, 2002 and undertook the process of washing and stentering, and thereafter the goods were returned to the supplier of the fabrics. However, they did not discharge any excise duty liability on the goods processed. The department was of the view that, since the process of stentering amounts to manufacture, the appellant as a job-worker, should have discharged excise duty liability on the processed fabrics and,  therefore, show cause notice was issued proposing to demand duty which was confirmed by the adjudicating and appellate authorities. Hence, the appellant is before tribunal.
 
Appellant’s contention:- The learned counsel for the appellant submits that the Rule 4(5)(a) of the Cenvat Credit Rules, 2002 permits a manufacturer to remove inputs as such or partially processed to a job-worker for further process, repair or reconditioning or for any other purpose and to bring back the same within a period of 180 days without reversal of the credit taken on the inputs. The supplier of fabrics, in the instant case, has followed this procedure and the appellant job-worker returned the goods to the original supplier after processing. The liability to pay duty is on the supplier of the goods and not on the job-worker. Therefore, the impugned duty demand on the job-worker is not sustainable in law. He relies on the decision of this Tribunal in the appellant’s own case for the previous period, vide order No. A/276-277/11/EB/C-II, dated 23-3-2011 wherein the appeal was allowed setting aside the duty demand. He also relies on the decision of this Tribunal in the case of Trico Process Pvt. Ltd. v. Commissioner of Central Excise [2005 (189)E.L.T.126]and Akash Fashion Prints (P) Ltd. v. Commissioner of Central Excise, Ahmedabad [2009 (245)E.L.T.871]where, in similar circumstances, it was held by the Tribunal that, when the goods are removed under Rule 4(5)(a) procedure, the job-worker is not liable to discharge any excise duty liability notwithstanding the fact that the goods are not specified in Notification 214/86-C.E. The ratio of the said decisions would apply to the facts of the present case. Accordingly, he pleads for setting aside the impugned order and allowing the appeal.
 
Respondent’s contention:- The learned Additional Commissioner (AR) appearing for the Revenue, on the other hand, reiterates the findings of the lower appellate authority. It is his contention that under Rule 4(5)(a) goods can be moved without reversal of credit for job-work. However, the duty liability at the job-worker’s end is not exempted by Notification and since fabrics are excluded from the scope of Notification 214/86-C.E., the job-worker should have discharged duty liability. The Additional Commissioner (AR) also submits that there is no evidence available on record that the processed goods have been returned within 180 days. In these circumstances, he pleads that the impugned order is sustainable in law.
 
Reasoning of judgment:- As held by Tribunal in appellant’s own case and also in Trico Process Pvt. Ltd. and Akash Fashion Prints (P) Ltd. cases (supra), the liability to pay duty in respect of goods moved under Rule 4(5)(a) is on the supplier of the goods and not on the job-worker. Therefore, notwithstanding the fact that the process fabrics are not included in Notification 214/86, the job-worker is not liable to discharge excise duty liability and any liability thereon is required to be discharged by the supplier of the raw materials. Rule 4(6) of the Cenvat Credit Rules makes it abundantly clear that, if the goods are required to be cleared from the job-worker’s premises instead of being returned to the supplier, then the Commissioner can direct clearance of the goods on payment of duty from job-worker’s premises. This would also indicate that the liability to discharge duty under the provisions of Rule 4(5)(a) is on the supplier of the goods and not on the processor of the goods. In this view of the matter, they find that the impugned order is not sustainable in law and merits to be set aside. Accordingly they allow the appeal.
 
Decision:- Appeal allowed.
 
Comment:- The substance of the case is that according to rule 4(5)(a), the liability to pay duty on goods moved for job work is on supplier of goods, not on job worker. This view is also supported by the decision given in the case ofTrico Process Pvt. Ltd.and Akash Fashion Prints (P) Ltd. Therefore, job worker is not liable to pay excise duty when the procedure prescribed under Rule 4(5)(a) is followed.
 
Prepared by:- Monika Tak
 

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