2007 (5) TMI 510 - AT - Central Excise

Summary

Issues involved: Appeal against setting aside penalty imposed on the respondent u/s Rule 57C of the Central Excise Act, 1944.

The appeal was directed against the Order in Appeal setting aside the penalty imposed on the respondent under Rule 57C of the Central Excise Act, 1944. The respondent, a job worker, availed Cenvat credit for duty paid inputs and used them for processing goods on a job work basis. The inputs were returned to the principal manufacturer after processing without payment of duty. The learned SDR argued that Rule 57C would be applicable in this case.

The Commissioner (A) concluded that the respondent was eligible for Modvat credit based on the findings of the Larger Bench in a previous case. The Commissioner noted that a job worker receiving goods for manufacture on a job-work basis was entitled to take credit of duty for inputs used in the manufacture of such goods. The Commissioner cited the case of Sterlite Industries (I) Ltd. v. CCE, Pune, where it was held that goods manufactured on a job-work basis and cleared without payment of duty were not affected by Rule 57C of the Central Excise Rules, 1944. Therefore, the demand for penalty was deemed unsustainable based on established law.

The Tribunal found no fault with the impugned order and rejected the appeal filed by the revenue, affirming the decision of the Commissioner (A) based on the legal principles established by the Larger Bench in the Sterlite Industries case.