CESTAT Chennai Rules in Favor of Godrej Consumer Products Ltd., Upholds Job Work Utilization under Target Plus Scheme

Tribunal clarifies "own use" clause in Customs Notification No. 73/2006-Cus, allowing manufacturer-exporters to utilize job workers without breaching conditions.

In a significant ruling, the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) Chennai has ruled in favor of M/s. Godrej Consumer Products Ltd., allowing the company to utilize job workers for manufacturing resultant products under the Target Plus Scheme without violating the conditions of Customs Notification No. 73/2006-Cus. The judgment, delivered by a bench comprising Mr. M. Ajit Kumar and Mr. Ajayan T.V, clarifies that the term "own use" within the notification includes the use of a job worker's facilities.

The case revolved around the import of 'PTC Thermistors' by Godrej under a duty credit certificate from the Target Plus Scheme, which the company then sent to M/s. EMOX Device and Company for job work. The Department had contested that this arrangement breached the notification's conditions, arguing that as a manufacturer-exporter, Godrej was required to use the imported goods directly without involving a job worker.

The tribunal, however, rejected this stance, emphasizing that the notification does not restrict the use of job workers. It cited previous judgments, including M/s. Silver Line Plastpack Pvt. Ltd. v. CCE & ST, which interpreted "own use" to encompass job worker utilization. The tribunal also referenced public notices and clarifications from the Directorate General of Foreign Trade (DGFT) that support the permissibility of job work under such schemes.

The ruling overturns previous decisions by the Commissioner of Customs (Appeals), who had denied Godrej the benefits of the notification, demanding a duty recovery of Rs. 41,24,764 along with interest, penalties, and a redemption fine for alleged non-compliance.

The tribunal's decision provides clarity on the interpretation of "own use" in customs exemptions and affirms the rights of manufacturer-exporters to leverage job work arrangements, thus setting a precedent for similar cases in the future.

Bottom Line:

Manufacturer-exporter can utilize the services of a job worker for manufacturing resultant products using imported goods under the Target Plus Scheme without violating the conditions of Customs Notification No. 73/2006-Cus.

Statutory provision(s): Customs Act, 1962 Section 25, Customs Notification No. 73/2006-Cus, Foreign Trade Policy (FTP), Section 3 of the Customs Tariff Act, 1975.

M/s. Godrej Consumer Products Ltd. v. Commissioner of Customs (Air), (CESTAT)(Chennai)(Regional Bench) : Law Finder Doc Id # 2819770