Holding

Under Rule 12B and the exemption notification, a trader is deemed an assessee and is liable to pay excise duty on the aggregate value of all clearances once the exemption limit is exceeded, irrespective of which job worker’s clearance crosses the threshold.

Summary

The appellants, traders of cotton fabrics and made‑ups, supplied raw material to over 70 job workers and cleared goods worth more than Rs 1.45 crore without paying excise duty. The Revenue issued show‑cause notices alleging duty liability, arguing that under Rule 12B of the Central Excise Rules the traders are to be treated as assessee and that the exemption under the 30‑April‑2003 Notification applies only to the aggregate value of clearances, not to each job worker individually. The appellants contended that liability should arise only against the job worker whose clearances exceeded the Rs 25 lakh limit. The Court examined the language of Rule 12B, the exemption notification and the 30‑Oct‑2003 circular, holding that the legal fiction in Rule 12B makes the trader an assessee for all clearances and that the exemption is conditioned on the aggregate value. Consequently, once the aggregate clearance exceeds the prescribed limit, the trader is liable to pay duty on the entire aggregate, not merely on the excess of a single job worker. The Court affirmed the assessment of the appellate authority and dismissed the appeals.

Issues considered

Whether a trader who receives clearances from multiple job workers is liable to pay excise duty under Rule 12B when the aggregate value of clearances exceeds the exemption limit.
Whether liability is limited to the job worker whose clearance exceeds Rs 25 lakh or extends to the aggregate of all clearances made by the trader.
How the exemption notification of 30‑April‑2003 (as amended) should be interpreted with respect to aggregate versus individual clearance limits.
Whether the legal fiction created by Rule 12B renders the trader an assessee for all purposes.

Legislation cited

Subjects

Job workCentral excise dutyLiability of traderAggregate clearanceExemption notificationLegal fictionRule 12BExcise duty assessment

Judgment

[2019] 2 S.C.R. 779 779

DINESH TEXTILES A
v.
COMMISSIONER OF CENTRAL EXCISE,
CUSTOMS AND SERVICE TAX, CALICUT
(Civil Appeal Nos. 9740–9741 of 2018)
FEBRUARY 28, 2019 B
[UDAY UMESH LALIT AND INDU MALHOTRA, JJ.]
Central Excise Rules, 2002:
r. 12B – Liability of dealer/trader of textiles and textile articles
– To pay duty for the goods manufactured through job workers –
C
Appellants-traders supplied raw material to more than 70 job workers
and cleared cotton fabrics and cotton made-ups to the tune of more
than Rs. 1.45 crores without paying any duty – Show cause notices
demanding duty from the appellants – Stand of appellants that job
workers were the manufacturers and hence there was no liability
on the traders – Adjudicating authority held that appellants were D
not liable – However, in appeal, appellate authority as well as
appellate Tribunal held that the appellants were liable to pay the
duty – In appeal, held: Section 12B introduces a legal fiction that
in case conditions stipulated therein are satisfied, the person
concerned is to be treated as an assessee – If the person is an
E
assessee, all the clearances by him so long as they come within
parameters of r. 12B, would make him liable – The Exemption
Notification also does not put the matter at individual clearances
of job workers and what is to be considered is an aggregate value
of the clearances – Therefore, it was not the individual clearance
of one single job worker alone, exceeding the limit of Rs. 25 lakhs, F
but the aggregate of all clearances made by the appellant-trader,
was liable to duty – Central Excise Act, 1944 – Central Excise Tariff
Act, 1985 – Chapters 52 and 53.
Dismissing the appeals, the Court
HELD: 1.1. According to Rule 12B of Central Excise Rules, G
2002 dealing with “job work in textiles and textiles articles”,
any person who gets yarn or fabrics; or readymade garments or
made up textile articles falling under Chapters mentioned in Rule

H
779
780 SUPREME COURT REPORTS [2019] 2 S.C.R.

A 12B produced or manufactured on his account on job work shall
obtain registration, maintain accounts and pay duty leviable on
such goods as if he is an assessee. If the conditions in Rule 12B
are satisfied, the liability on such person gets fixed “as if he is an
assessee”. [Para 14][788-G, H]
B 2. The Exemption Notification dated 30.04.2003 exempts
“first clearances for home consumption, upto an aggregate value
not exceeding twenty lakh rupees…”. The emphasis is on the
aggregate value and what is exempted is, “…upto an aggregate
value”. The conditions stipulated in Para 2 of said Exemption
Notification, specially clauses (i) and (ii) again emphasize the
C applicability in respect of “aggregate value of clearances for home
consumption and not separately regarding individual clearances”.
The extent of limits was raised by subsequent Notification
dated 17.05.2003. The language of the exemption Notification
as amended, is quite clear. However, certain doubts
D arose which were clarified by Circular dated 30.10.2003.
[Paras 14 and 15][789-A-C]
3. If Rule 12B introduces a premise that if the conditions
in said Rule are satisfied, the person concerned is an assessee
for all purposes, it does not stand to reason how third illustration
E in Circular dated 30.10.2003 fits in the scheme of Rule 12B as
well as the Exemption Notification. What Rule 12B introduces is
nothing but a legal fiction that in case the conditions stipulated
therein are satisfied, the person concerned is to be treated as an
assessee. If he is an assessee, all the clearances by him so long
as they come within the parameters of Rule12B, would make
F
him liable. The Exemption Notification again does not put the
matter at individual clearances of job workers and what is to be
considered is an aggregate value of the clearances. It is well
settled that if a legal fiction is introduced, that legal fiction must
be taken to the logical end. [Para 16][789-F-H; 790-A]
G 4. For the present purposes, second illustration in the
Circular dated 30.10.2003 is more appropriate. According to said
illustration, the moment the clearances go beyond the limit, the
liability gets fastened in respect of the aggregate value of

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clearances. If the submission made by the Appellant is accepted A
to be correct, the second illustration would have exempted all
the clearances in respect of ‘A’, ‘B’ and ‘C’. Again, if the
contention of the Appellant is accepted, a dealer may get the
goods referred to in Rule 12B manufactured from several job
workers to ensure that the value of the clearances from each job
B
worker is less than the limit prescribed for individual clearances.
In such a case the emphasis in the Rule regarding aggregate
clearances would be rendered meaningless. [Para 17][790-C-D]
5. The assessment made by the Appellate Authority and
the Tribunal was, therefore, correct. Consequently, it was not
the individual clearance of one single job worker alone exceeding C
the limit of Rs.25 lakhs but the aggregate of all clearances made
by the Appellant, was liable to duty. [Para 18][790-E]
Gurupad Khandappa Magdum v. Hirabai Khandappa
Magdum and others (1978) 3 SCC 383 : [1978] 3 SCR
761 – relied on. D
East End Dwelling Co. Ltd. v. Finsbury Borough Council
(1952) AC 109, 132 = (1951) 2 ALL ER 587 – referred
to.
Case Law Reference
[1978] 3 SCR 761 relied on Para 16 E
(1951) 2 ALL ER 587 referred to Para 16
CIVIL APPELLATE JURISDICTION : Civil Appeal No. 9740-
9741 of 2018
From the Judgment and Order No. 20115 of 2018 dated 06.02.2018
and Misc. Order No. 20697 of 2018 dated 15.06.2018 of the Customs F
Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore
in Central Excise Appeal No. E/370/2008-DB
S. Durai Raj, S. Sukumar, Bhupesh Kr. Pathak and Ms. Meera
Mathur, Advs., for the Appellant.
V. Shekhar, Sr. Advocate, Ms. Sunita Rani Singh, D. N. Goburdhun, G
B. Krishna Prasad, N. P. Rakeesh Panikar, Nishad L. S., Anuj K. Verkey
and Ms. Manju Jetly, Advs., for the Respondents.

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782 SUPREME COURT REPORTS [2019] 2 S.C.R.

A The Judgment of the Court was delivered by
UDAY UMESH LALIT, J.
1. These appeals filed under Section 35L of the Central Excise
Act, 1944 (hereinafter referred to as “the Excise Act”) question the
correctness of the Final Order dated 06.02.2018 passed by the Customs,
B Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore
(hereinafter referred to as “the Tribunal) in Central Excise Appeal No.E/
370/2008-DB and Misc. Order No.20697 of 2018 dated 15.06.2018
passed by the Tribunal rejecting application seeking rectification of
mistake.
C 2. The Appellants are traders who get cotton fabrics and made-
ups mentioned in Chapters 52 and 53 of the Central Excise Tariff Act,
1985 (the ‘Tariff Act’, for short) manufactured through job workers.
3. On 25.03.2003 Rule 12B was inserted in Central Excise Rules,
2002 to deal with “Job work in textiles and textile articles”. The relevant
D portion of Rule 12B is as under:
“RULE 1[12B. Job work in textiles and textile articles. –
(1) Notwithstanding any thing contained in these rules, every person
(not being an export-oriented unit or a unit located in special
economic zone) who gets 2[yarns or fabrics falling under Chapter
E 50, 51, 52, 53, 54, 55, 58 or 60, readymade garments falling under
Chapter 61 or 62 or made up textile articles falling under Chapter
63 of First Schedule to the Tariff Act] produced or manufactured
on his account, on job work (herein after referred to as “the said
person”) shall obtain registration, maintain accounts, pay duty
leviable on such goods and comply with all the relevant provisions
F
of these rules, as if he is an assessee :
Provided that the job worker may, at his option, agree to obtain
registration, maintain accounts, pay the duty leviable on such goods,
prepare the invoice and comply with the other provisions of these
G

1
Inserted by M.F. & C.A. (D.R.) Notification No.24/2003-C.E. (N.T.),
dated 25-03-2003
2
Substituted by M.F. & C.A. (D.R.) Notification No.27/2003-C.E. (N.T.),
dated 1-4-2003.
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DINESH TEXTILES v. COMMR. OF CENTRAL EXCISE, 783
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rules. In such a case the provisions of these rules shall not apply A
to the said person. The job worker, may, at his option, authorize
the said person to, on his behalf as his agent, maintain accounts,
pay duty, prepare invoice and comply with any of the provisions
of these rule except that of rule 9 :
Provided further that the job worker may make an option to B
undertake the activities mentioned in this sub-rule as an agent or
person authorized by the said person and in such a case, the said
job worker shall be deemed to be the said person……….”
4. Soon thereafter Exemption Notification was issued by the
Government of India on 30.04.2003 wherein exemption was granted for
C
clearances upto Rs.20 lakhs in respect of processes falling under Chapters
51, 52, 54, 55, 58 or 60 of the First Schedule to the Tariff Act. The
substantive part of the Notification was as under:
“In exercise of the powers conferred by sub-section (1) of section
5A of the Central Excise Act, 1944 (1 of 1944), read with sub-
section (3) of section 3 of the Additional Duties of Excise (Goods D
of Special Importance) Act, 1957 (58 of 1957), the Central
Government, being satisfied that it is necessary in the public interest
so to do, hereby exempts first clearances for home consumption,
upto an aggregate value not exceeding twenty lakh rupees made
on or after the 1st day of April in any financial year, of fabrics, not E
subjected to any process falling under Chapter 51, 52, 54, 55, 58
or 60 of the First Schedule to the Central Excise Tariff Act, 1985
(5 of 1986) (herein after referred to as the specified goods), from
the whole of the duty of excise specified thereon in the First
Schedule to the said Central Excise Tariff Act and the First F
Schedule to the said Additional Duties of Excise (Goods of Special
Importance) Act :
Provided that during the financial year 2003-2004, the exemption
contained in this notification shall apply to the first clearances for
home consumption of the specified goods, upto an aggregate value G
not exceeding twenty lakh rupees made on or after the 30th day
of April 2003.

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784 SUPREME COURT REPORTS [2019] 2 S.C.R.

A 2. The exemption contained in this notification shall apply subject
to the following conditions, namely,-
(i) where a manufacturer clears the specified goods from one
or more factories, the exemption in his case shall apply to the said
aggregate value of clearances for home consumption and not
B separately for each factory;
(ii) where the specified goods are cleared by one or more
manufacturers from a factory, the exemption shall apply to the
said aggregate value of clearances for home consumption and
not separately for each manufacturer;
C (iii) the aggregate value of clearances for home consumption of
specified goods, by the said manufacturer from one or more
factories, or from a factory by one or more manufacturers, does
not exceed twenty five lakh rupees in a financial year :
Provided that in the financial year 2003-2004, the exemption
shall apply only if the aggregate value of clearances of specified
D goods, by a manufacturer from one or more factories, or from a
factory by one or more manufacturers, does not exceed twenty
five lakh rupees during the period beginning from the 30th day of
April, 2003:
Provided further that in any financial year, if the aggregate value
E of clearances for home consumption of specified goods exceeds
twenty five lakh rupees, or as the case may be, in the financial
year 2003-2004, if the aggregate value of clearances for home
consumption of specified goods during the period beginning from
the 30th day of April, 2003 exceeds twenty five lakh rupees, the
said manufacture shall pay the amount of duty as payable, on the
F
said first clearances of the specified goods of twenty lakh rupees,
but for the exemption contained in this notification, within thirty
days of the day when such clearance exceeds the said twenty
five lakh rupees;
(iv) the manufacturer shall keep all documents relating to purchase
G of yarns;”
5. By further Notification No.47/2003-CE dated 17.05.2003 the
earlier notification dated 30.04.2003 was amended as under:

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DINESH TEXTILES v. COMMR. OF CENTRAL EXCISE, 785
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S. N o t i f ic a t i o n A m e n d m en ts A
No. N o . an d d ate
(1) (2) (3 )
1. 3 4 /2 0 0 3 - I n t h e sa i d n o t if i c a t i o n , -
C e n t ra l ( i) fo r t h e w o r d s “ t h i rt y
E x c i se , d a t e d la k h r u p e e s ” w h e r e v e r
th
the 30 th e y o c c u r , th e w o r d s
A p r il, 2 0 0 3 “ fo r ty lak h ru p e es” sh all B
b e su b s t it u t e d ;
( ii) fo r t h e w o r d s “ t w e n t y
f iv e lak h ru p e e s ”
w h e re v e r t h e y o c c u r , t h e
w o rd s “ th ir t y la k h
ru p ees ” s h a ll be
s u b st i t u t e d . C
2. 3 5 /2 0 0 3 - I n t h e s a i d n o t if i c a t i o n –
C e n t ra l ( i) fo r t h e w o r d s “ t w e n t y
E x c i se , d a t e d f iv e lak h ru p e e s ”
the 3 0 th w h e re v e r t h e y o c c u r , t h e
A p r i l, 2 0 0 3 w o r d s “ t h i rt y fi v e l a k h
ru p ees ” s h a ll be
s u b st i t u t e d ; D
( ii) fo r t h e w o r d s “ t w e n t y
la k h r u p e e s ” w h e r e v e r
th e y o c c u r , th e w o r d s
“ tw e n ty fi v e la k h
ru p ees ” s h a ll be
s u b st i t u t e d .
3. 3 6 /2 0 0 3 - I n t h e sa i d n o t if i c a t i o n , - E
C e n t ra l ( a ) i n th e o p e n i n g p a r a g r a p h ,
E x c i se , d a t e d a f t e r i t e m n u m b e r (i v ) , t h e
the 3 0 th f o l lo w i n g sh a ll b e i n se r t e d
A p r il, 2 0 0 3 n a m e l y .-
“ ( v ) te r r y to w e ls f a llin g u n d e r
C h a p te r 6 3 ;
v i) w o o le n b la n k e ts , o f y a r n o f
sh o d d y , f a l l i n g u n d e r C h a p t e r
F
6 3 ”;
b ) i n p a r a g r a p h 2 , fo r t h e
w o rd s “th ir ty la k h r u p ees ”
w h e r e v e r th e y o c c u r, t h e w o r d s
“ t h i r t y fi v e l a k h r up e e s” sh a l l
b e su b s ti t u t e d .
G
6. Since there were doubts regarding extent of applicability of the
aforesaid Exemption Notifications, a Clarification was issued by the
Government of India, Ministry of Finance, Department of Revenue,
Central Board of Excise & Customs, New Delhi vide circular dated
30.10.2003. The relevant portion of the Circular dated 30.10.2003 stating
three illustrations is as under: H
786 SUPREME COURT REPORTS [2019] 2 S.C.R.

A “(f) the following illustrations are given to explain the above, -
· Three traders A, B and C get grey fabrics manufactured from
job worker ‘X’. The value (raw material cost + job charges) of
the goods made on job work for each of the trader is Rs.20 lakhs.
Since total clearance value of the job worker is Rs.60 lakhs, he is
B not eligible to claim any benefit under Notification 35/2003-C.E.
Duty is payable on his entire clearance.
· Three traders A, B and C get grey fabrics manufactured from
job worker ‘X’. In addition, X also clears grey fabrics manufactured
by him as independent weaver. His clearance as independent
weaver is Rs.15 lakhs. Thereafter, he undertakes job work for A,
C B and C in a sequential manner. The value of clearances for A is,
say, Rs.5 lakhs, that for B is, 7 lakhs and for C is, Rs.7 lakhs. For
clearances made as independent weaver and on job work for ‘A’,
there is no duty as the total clearance till then is below Rs.25
lakhs. The first clearances of Rs.5 lakhs for ‘B’ are also
D exempted. Thus, till then, ‘B’ need not follow Rule 12B procedure.
However, the balance Rs.2 lakhs clearances for ‘B’ become
dutiable, as the total clearances of ‘X’ have now crossed the limit
of Rs.25 lakhs. Thus, now ‘B’ has to take registration and pay
duty on clearances of Rs.2 lakhs. As for ‘C’ his entire clearances
of Rs.7 lakhs are dutiable and he has to follow Rule 12B procedure
E for his entire clearances. It may be mentioned that in case the
clearances value for ‘C’ increases beyond Rs.8 lakhs, the total
clearance value of ‘X’ exceeds Rs.35 lakhs eligibility limit.
Consequently, the entire clearance of ‘X’ would become dutiable
and duty demand would arise against all i.e. ‘A’, ‘B’, ‘C’ and ‘X’
F on their respective clearances.
· A trader ‘A’ gets grey fabrics manufactured by job workers ‘X’,
‘Y’ and ‘Z’ and the total clearance value of each of these job
workers is below Rs.25 lakhs. All the clearances from the job
workers are within the exemption limit for individual units. The
trader has no obligation to register himself or pay duty in terms of
G
Rule 12B. In other words, he is out of the scope of the provisions
of Rule 12B.”
7. During the period from April 2003 to January 2004 the
Appellants had cleared cotton fabrics to the tune of Rs.1,70,12,745/-
and cotton made-ups to the tune of Rs.7,82,635/- without paying any
H
DINESH TEXTILES v. COMMR. OF CENTRAL EXCISE, 787
CUSTOMS & SERVICE TAX, CALICUT [UDAY UMESH LALIT, J.]

duty as according to them the liability was only on the job workers who A
were the actual manufacturers and that there was no liability on the
trader. Two show cause notices were issued on 07.07.2004 and
14.01.2005 by the Department demanding duty of Rs.12,28,801/- (BED)
and Rs.3,07,201/- (AED) vide the first notice and Rs.1,94,828/- (BED)
and Rs.48,707/- vide the second notice.
B
8. The Appellants submitted before the Adjudicating Authority
that the job workers were the manufacturers and that no liability could
be fixed on the traders. The submission was accepted by the Joint
Commissioner of Central Excise at Calicut vide Order dated 28.11.2005.
It was held that in a situation where raw materials were supplied by a
unit to the job worker, the duty liability would be on the job worker. C
9. The Revenue filed appeal before the Appellate Authority. After
considering rival contentions, the Appellate Authority by Order dated
31.01.2008 held the Appellants liable. Relying on the Circular dated
30.10.2003, it was observed,
“As per clarification under clause A(e) and the Illustrations under D
clause A(f), the duty liability is on the Trader once any of the job
worker had crossed the exemption limit of Rs.25 lakhs. The total
clearance from the dealer in respect of all the goods cleared by
him from all job workers would be chargeable to duty. In the
instant case, though the respondents had submitted that they had E
not availed Cenvat, they had around seventy job workers etc.,
they have also conceded that the total value of clearances from
one of the job worker M/s. Dinesh Weaving Mills had exceeded
Rs.25 Lakhs. As per clause A(d) for the value limit of Rs.25
lakhs, value of all clearances is to be taken. Thus in terms of
clause A(e) of Board Circular duty would be payable and trader F
would have to be registered and pay the duty. So also all past
clearances become dutiable and the trader/traders/ weavers, would
be required to discharge the duty on earlier clearances.”
Confirming the demand as raised in the Show Cause Notices, the
Appellate Authority also imposed penalty of Rs.10,000/-. G
10. The Appellants being aggrieved, filed Central Excise Appeal
No.E/370/2008-DB before the Tribunal. The Tribunal found no infirmity
in the order of the Appellate Authority and dismissed said Appeal on
06.02.2018. It was held,
H
788 SUPREME COURT REPORTS [2019] 2 S.C.R.

A “In the instant case, appellant’s job worker M/s Dinesh Weaving
Mills has crossed the limit of Rs.25 lakhs. When it is so, then the
appellant is not entitled to the benefit of exemption under the
Notification No.35/2003 dated 30.04.2003, where in para 2(i), has
discussed the aggregate value of the clearances. In the instant
case, the aggregate value is more than Rs.57 lakhs in the case of
B
job worker M/s Dinesh weaving Mills. Thus, the statutory limit of
Rs.25 lakhs has been crossed. When it is so, then the appellant is
not entitled for the exemption.”
11. A Rectification Application was thereafter filed by the
Appellants which was also dismissed by the Tribunal on 15.06.2018.
C 12. The Appellants have challenged the aforesaid Orders dated
06.02.2018 and 15.06.2018 passed by the Tribunal, in this appeal. We
heard Mr. S. Durai Raj, learned Advocate for the Appellants and Mr. V.
Shekhar learned Senior Advocate for the Respondent. It was submitted
by the Appellants that in terms of the Circular dated 30.10.2003, the duty
D could not be demanded if the value of clearance of job workers was less
than Rs.25 lakhs individually and the Revenue could raise demand only
in respect of the clearance value of that job worker, where the value
was in excess of Rs.25 lakhs. The Revenue on the other hand submitted
that in terms of said Circular, if the clearance value of even one job
worker were to be in excess of Rs.25 lakhs, the dealer would be liable in
E respect of the clearances of all the job workers and aggregate value
thereof.
13. In the present case the Appellants had supplied raw material
to more than 70 job workers and the total clearances were more than
Rs.1.45 crore. Only one out of said job workers had crossed the limit of
F Rs.25 lakhs while the individual clearances of rest of the job workers
were less than Rs.25 lakhs. The question that arises is whether the
Appellants’ liability is only in respect of the clearance of that job worker
whose clearance was greater than the limit of Rs.25 lakhs or in respect
of the entire aggregate value of clearances.
G 14. According to Rule 12B3 dealing with “job work in textiles and
textiles articles”, any person who gets yarn or fabrics; or readymade
garments or made up textile articles falling under Chapters mentioned in
said Rule 12B produced or manufactured on his account on job work
shall obtain registration, maintain accounts and pay duty leviable on such
goods as if he is an assessee. If the conditions in Rule 12B are satisfied,
H 3
Introduced on 25.03.2003
DINESH TEXTILES v. COMMR. OF CENTRAL EXCISE, 789
CUSTOMS & SERVICE TAX, CALICUT [UDAY UMESH LALIT, J.]

the liability on such person gets fixed “as if he is an assessee”. The A
Exemption Notification dated 30.04.2003 exempts “first clearances for
home consumption, upto an aggregate value not exceeding twenty lakh
rupees…”. The emphasis is on the aggregate value and what is exempted
is, “…upto an aggregate value”. The conditions stipulated in Para 2 of
said Exemption Notification, specially clauses (i) and (ii) again emphasize
B
the applicability in respect of “aggregate value of clearances for home
consumption and not separately regarding individual clearances”. The
extent of limits was raised by subsequent Notification dated 17.05.2003.
15. In our considered view, the language of the exemption
Notification as amended, is quite clear. However, certain doubts arose
which were clarified by Circular dated 30.10.2003. This Circular gives C
three illustrations. According to the First illustration, even though the
clearances of the job worker qua each of three traders was Rs.20 lakhs
since the aggregate value of clearance was Rs.60 lakhs, he would not
be eligible to claim any benefit and must pay due in respect of entire
clearance. According to the second illustration so long as the clearances D
of the job worker were within the aggregate limit, no liability would get
fixed but the moment clearances went beyond the limit, the illustration
makes it clear that the entire clearances of the job worker would become
dutiable. The third illustration however strikes a slightly different note
and says that if a trader got grey fabrics manufactured by three job
workers and the clearance value of each of those job workers was E
below Rs.25 lakhs, the trader had no obligation and would be out of the
scope of the provisions of Rule 12B.
16. We find it difficult to accept how the emphasis in the Exemption
Notification on the aggregate value could be diluted and the trader would
not be liable on the aggregate value in the third illustration. If Rule 12B F
introduces a premise that if the conditions in said Rule are satisfied, the
person concerned is an assessee for all purposes, it does not stand to
reason how third illustration fits in the scheme of Rule 12B as well as
the Exemption Notification. What Rule 12B introduces is nothing but a
legal fiction that in case the conditions stipulated therein are satisfied,
the person concerned is to be treated as an assessee. If he is an assessee, G
all the clearances by him so long as they come within the parameters of
Rule12B, would make him liable. The Exemption Notification again
does not put the matter at individual clearances of job workers and what
is to be considered is an aggregate value of the clearances. It is well
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790 SUPREME COURT REPORTS [2019] 2 S.C.R.

A settled that if a legal fiction is introduced that legal fiction must be taken
to the logical end. In Gurupad Khandappa Magdum v. Hirabai
Khandappa Magdum and others4, while dealing with legal fiction
introduced in Section 6 of the Hindu Succession Act, this Court quoted
with approval passage in East End Dwelling Co. Ltd. vs. Finsbury
Borough Council5 and held that once the statute requires an assumption
B
to be made, such assumption is irrevocable and all consequences which
flow from the assumption must permeate the process of ascertainment
thereafter.
17. Be that as it may, for the present purposes second illustration
in the Circular dated 30.10.2003 is more appropriate. According to said
C illustration, the moment the clearances go beyond the limit, the liability
gets fastened in respect of the aggregate value of clearances. If the
submission made by the Appellant is accepted to be correct, the second
illustration would have exempted all the clearances in respect of ‘A’, ‘B’
and ‘C’. Again, if the contention of the Appellant is accepted, a dealer
D may get the goods referred to in Rule 12B manufactured from several
job workers to ensure that the value of the clearances from each job
worker is less than the limit prescribed for individual clearances. In
such a case the emphasis in the Rule regarding aggregate clearances
would be rendered meaningless.
18. The assessment made by the Appellate Authority and the
E Tribunal was, therefore, correct. Consequently, it was not the individual
clearance of one single job worker alone exceeding the limit of Rs.25
lakhs but the aggregate of all clearances made by the Appellant, was
liable to duty. We have no hesitation in affirming the view taken by the
Tribunal.
F 19. We, therefore, dismiss the present appeals. No orders as to
costs.

Kalpana K. Tripathy Appeals dismissed.

G

4
(1978) 3 SCC 383
5
H (1952) AC 109, 132 = (1951) 2 ALL ER 587