Summary
The Court upheld excise duty on the trader’s aggregate clearances of textiles made through job workers. Rule 12B treated the trader as the assessee; liability was not confined to the single job worker whose clearances exceeded the exemption threshold.
Issues
- Whether the trader’s liability covered all aggregate clearances or only those of the job worker who exceeded the exemption limit.
Provisions considered
- Rule 12B(1), Central Excise Rules, 2002The legal fiction treated a person getting specified textiles manufactured on its account through job work as the assessee, with registration, accounting and duty obligations. Its consequences extended to the aggregate qualifying clearances. (¶¶ 3, 14, 16, 17, 18)
- Notification 35/2003-CE dated 30 April 2003, as amended by Notification 47/2003-CE dated 17 May 2003, Central Excise exemption notificationsThe exemption and eligibility limits operated on aggregate clearances; fragmentation among job workers could not defeat that scheme. (¶¶ 4, 5, 14, 15, 16, 17, 18)
Held
- Rule 12B’s treatment of the trader as assessee had to be carried to its logical conclusion. The notification emphasized aggregate value rather than isolated job-worker clearances. (¶¶ 14, 16)
- The Court questioned the fit of the circular’s third illustration with the rule and notification; for this dispute, its second illustration supported fastening liability on the aggregate once the limit was crossed. (¶¶ 6, 15, 16, 17)
- Restricting duty to one job worker’s clearances would permit fragmentation of work among many small units and defeat the aggregate-clearance condition. The appellate assessment and Tribunal’s order were correct on these facts. (¶¶ 13, 17, 18, 19)
Result
Appeals dismissed; duty assessment on aggregate clearances and Tribunal’s orders affirmed. No costs.