2026-VIL-1143-CESTAT-HYD-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Clubbing of Job Worker Turnover for SSI exemption vide Notification No.8/2003-CE dtd.01.03.2003 - Department clubbed the value of goods manufactured by job workers with the appellant-manufacturer's turnover, making it ineligible for exemption as the aggregate exceeds the threshold – Appellant contests that job workers are independent manufacturers and their turnover cannot be clubbed - Whether the value of goods manufactured by job workers on behalf of the principal manufacturer needs to be clubbed with the turnover of the principal manufacturer for determining exemption notification eligibility – HELD - The purpose of restricting exemption under the Notification No.8/2003-CE dt.01.03.2003 is to prevent units from exploiting provisions by getting goods manufactured through multiple job workers while exercising de facto control over manufacturing. The factual matrix clearly demonstrates a principal manufacturer and job worker relationship rather than principal to principal transaction. The basic packaging materials are supplied by the principal, goods are branded with the principal's brand name, job workers are contractually restricted from independent marketing, and filled bottles are returned to the principal for sale - The governing notification's conditions explicitly require aggregation of clearances when excisable goods are manufactured by a manufacturer from one or more factories or by one or more manufacturers from a factory. Since goods are manufactured on behalf of the principal manufacturer as evidenced by the franchise agreement terms, the turnover must be clubbed with that of the principal manufacturer for determining exemption eligibility. The impugned orders are upheld, with extended period of limitation and penalty being sustainable – The appeal is dismissed
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