2008 (1) TMI 723 - AT - Central Excise

Summary

Issues:
1. Appeal against Order-in-Appeal No. 15/CE/Alld/2006 regarding Cenvat credit availed on inputs by job worker.

Analysis:
The appeal was filed against Order-in-Appeal No. 15/CE/Alld/2006, which pertained to the denial of Cenvat credit on inputs by a job worker. The appellant argued that the job worker, besides using raw materials from the principal manufacturer, also obtained certain inputs independently for manufacturing goods. The revenue contended that since the job worker cleared goods to the principal manufacturer without paying duty, Cenvat credit should not be allowed. The appellant relied on a precedent involving Sterlite Industries (I) Ltd. v. CCE, Pune, where it was held that a job worker receiving goods from a manufacturer under Rule 57F of the Central Excise Rules, 1944, could claim credit for duty on other inputs used in manufacturing goods on a job work basis.

Upon careful consideration, the judge noted that under the law, Cenvat credit could only be denied when the final product was exempted or subject to a Nil rate of duty. In this case, even though the job worker did not pay duty on goods cleared to the principal manufacturer, the principal manufacturer ultimately paid duty upon clearance. Therefore, the goods for which Cenvat credit was claimed were not exempted or subject to Nil rate of duty. The judge also highlighted the precedent set by the Larger Bench decision in Sterlite Industries (I) Ltd. v. CCE, Pune, which had not been overruled. Consequently, the judge set aside the impugned order and allowed the appeal, granting consequential relief to the appellant.