2008 (7) TMI 749 - AT - Central Excise

Cenvat/Modvat - Inputs - Job work - Held that - the goods which were cleared by the job worker after processing under Notification No. 214/86-CE, the principal manufacturer is clearing the same on payment of appropriate duty. The provisions of Rules 57C and 57CC of Central Excise Rules and Rules 6 of Cenvat Credit Rules are similarly worded, the question referred is answered in favour of the assessee - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Whether Cenvat credit to job worker is available on fuel used in the manufacture of dutiable goods cleared to the principal manufacturer under an exemption notification.

Detailed Analysis:

1. The main issue in this case was whether Cenvat credit is available to a job worker on fuel used in the manufacture of goods cleared to the principal manufacturer under an exemption notification. The Single Bench referred this question to the Division Bench for clarification.

2. The Division Bench relied on a judgment by the Hon'ble Madhya Pradesh High Court in the case of Union of India v. Flex Chemicals Ltd. The High Court held that no credit on specified duty is allowable on inputs used in the manufacture of final products exempt from duty or chargeable at a NIL rate. However, the Court also stated that if the final products attract duty, the assessee is entitled to the Modvat credit facility on the fuel used in manufacturing.

3. The Tribunal found that the provisions of Rules 57C and 57CC of Central Excise Rules, along with Rules 6 of Cenvat Credit Rules, are similarly worded. Therefore, based on the decision of the Hon'ble Madhya Pradesh High Court, it was concluded that the job worker is entitled to Cenvat credit on the fuel used in manufacturing goods cleared under the exemption notification.

4. The goods processed by the job worker under the exemption notification were cleared by the principal manufacturer on payment of appropriate duty. Since the issue was settled by the High Court judgment and no other issues were raised, the Tribunal dismissed the appeal filed by the revenue in favor of the assessee.

5. The judgment was pronounced in open court, and the appeal was decided based on the interpretation of relevant legal provisions and precedents set by the High Court, ensuring clarity on the availability of Cenvat credit in similar cases involving job workers and exemption notifications.

This comprehensive analysis of the judgment highlights the legal interpretation, application of rules, and the final decision reached by the Appellate Tribunal based on the settled legal principles and precedents cited in the case.