2007 (1) TMI 412 - AT - Central Excise

Summary

Issues involved: Interpretation of Rule 57F(3) regarding job work activity and credit reversal on inputs sent to job worker.

In this case, the Appellate Tribunal CESTAT, Mumbai heard the revenue's appeal regarding the sending of inputs Crotonaldehyde to a job worker for the manufacture of special denatured spirit without reversing the credit taken on the inputs. The revenue argued that the job worker's activity did not qualify as job work under Rule 57F(3) as the inputs were only mixed in minimal quantity with Ethyl alcohol. The Commissioner (Appeals) had held that the activity would be covered under Rule 57F(3), but the revenue disagreed. The revenue contended that if the inputs had been cleared on payment of duty, the job worker would have been entitled to credit, making the exercise revenue neutral. The Tribunal found that the exercise was indeed revenue neutral, as the job worker would have taken credit for the duty paid by the respondents, and therefore dismissed the revenue's appeal on this basis.