Company Or Its Directors Not Liable To Pay Excise Duty If Job Workers Are Independent Contractors/Manufacturers: CESTAT

The Kolkata Bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has held that a company or its directors are not liable to pay excise duty if the job workers of the assessee company were independent contractors or manufacturers.

The bench of P. K. Choudhury (Judicial Member) and K. Anpazhakan (Technical Member) have observed that if the job workers are proven to be independent contractors with little or no supervision by the assessee, then they are the manufacturers and the liability of paying excise duty is with them.

The assessee or appellant sent materials to diverse job workers for the manufacture of the final product. Only inspection of the finished goods was carried out at the premises of the assessee. If the job workers are proven to be the agents of the assessee who work under their supervision and control, then the assessee is the real manufacturer and not the job workers. Excise duty is payable by the assessee.

On the other hand, if the job workers are proven to be independent contractors with little or no supervision by the assessee, then they are the manufacturers, and the liability of paying excise duty is with them.

The issue raised was whether the job workers of the assessee were independent manufacturers or agents of the manufacturers in the sense of whether the job workers had undertaken the job of manufacture under the supervision and control of the assessee company or not.

The Tribunal held that the assessee company and/or its directors cannot be saddled with any liability for payment of excise duty and/or consequential penalties with respect to the goods so manufactured by the said job workers.

Case Title: M/s. Comet Technocom Pvt. Ltd. Versus Commissioner of Central Excise & S. Tax, Kolkata-II

Case No.: Excise Appeal Nos. 199-201 of 2009

Date: 28.04.2023

Counsel For Appellant: Arijit Chakraborty

Counsel For Respondent: S. Mukhopadhyay

Click Here To Read The Order