Full Judgment
2. Shri Gagan Kohli, learned Advocate, pleaded that if provisions of Rule 57F(4) are not applicable to the appellants, then duty should have been demanded from the job workers who converted scrap into ingots. He states that this point was raised by him before the Adjudicating Authority but there is no finding on this point. He, however, pleads that after this show cause notice, the Revenue has started issuing notice to job worker M/s. Hem Kunt Iron & Steel (P) Ltd. for subsequent period for charging duty from them. He produced copy of the show cause notice C. No. CE-20/HEMKUNT/SCN/R-III/98/768 dated 3.7.98 where duty of Rs. 5,83,141,35 was demanded from them for the period December 1997 to May 1998 on ingots. He pleaded that the manufacturer of the ingots is actual manufacture and duty should have been demanded from him. He relied on the decision of the Tribunal in the case of Desk Rolling Mills v. CCE, Delhi, 2000 (122) ELT 481 where it was held that Notification No. 214/86-CE nowhere provides that the supplier of the raw material will be liable to pay duty on the goods manufactured as a job work. Para 2 of the said notification speaks of a liability of the supplier for discharging the duty leviable on the finished products and not on the goods manufactured on job work basis and Mayo India Ltd. v.CCE, Aurangabad, 1999 (113) ELT 1036 where it was held that in the absence of evidence of supervision and control over manufacture of goods by the assessee, the job work is the actual manufacturer and not the assessee., He pleads that in the present case, the appellants have supplied steel scrap to the job worker Under Rule 57F(4)/Notification No. 214/86 dated 25.3.86 to M/s. Hem Kunt Iron & Steel Pvt. Ltd. who manufactured the steel ingots. He pleads that if the department has held that the appellants are not eligible for sending raw material for job work under the notification then they are only supplier of the raw material to job worker M/s. Hem Kunt Iron & Steel Pvt. Ltd. and ingots manufactured by them became chargeable to duty and duty should have been demanded from M/s. Hem Kunt Iron & Steel Pvt. Ltd. and not from the appellants. On time bar issue, he pleads that they have also taken the plea before the lower authorities that on 17.12.1997 their factory was working and there was no reason for pasting the show cause notice at the factory gate. He also pleads that show cause notice was shown to have been sent by registered post also. He also pleads that the case was remanded back to the original authority to supply them the copy of the panchmana dated 17.12.1997 under which the show cause notice was pasted at the factory gate. The copy was not supplied to them. He finally pleads that since they have case on merits, therefore, he is not pressing for the time bar issue.
3. Shri P.M. Rao, learned, JDR pleads that the appellants have wrongly availed job work procedure Under Rule 57F(4) for which they were not entitled to. Therefore, they are liable for penalty.
4. I have considered the submissions made by both the sides. I find that the appellant have supplied raw material to M/s. Hemkunt Iron & Steel (P) Ltd. who converted scrap into steel ingots. Therefore, they are manufacturer of the steel ingots. If duty was required to be demanded, it should have been demanded from the manufacturer and not from the supplier of the raw material. Even if the supplier of the material has wrongly followed procedure under Rule 57F(4) and job work Notification No. 214/86-CE, they were responsible for payment of duty only on the finished products manufactured by them and not on steel ingots as has been held by the Tribunal in the case of Desh Rolling Mills v. CCE, Delhi (supra). In these circumstances, duty cannot; be demanded from the appellants. There is no violation of rule by the appellants with intend to evade any duty. Therefore, the penalty can also not be imposed on them, I, therefore, set aside the order of the Commissioner (Appeals) and allow the appeal.