2009 (12) TMI 789 - AT - Central Excise

Reversal of CENVAT credit - job-work - Rule 6(3) of Cenvat Credit Rules, 2001/2002 - non-maintenance of separate books of accounts for dutiable and exempted goods - whether the respondent as job worker were eligible for Cenvat credit of inputs used in or in relation to the manufacture of goods on job work, which were cleared without payment of duty to the principal manufacturers who, in turn, cleared the same on payment of duty?

Summary

Issues:
1. Interpretation of Cenvat Credit Rules regarding the eligibility of job workers for Cenvat credit on inputs used in manufacturing goods cleared without payment of duty.
2. Applicability of Rule 12B of Central Excise Rules to the disputed period.
3. Admissibility of Cenvat credit demand for the period from April '01 to March '03.
4. Relevance of Tribunal judgments in similar cases and their impact on the present dispute.

Analysis:
1. The case involved a dispute regarding the eligibility of a respondent, who manufactured woolen products for themselves and on job work basis, for Cenvat credit on inputs used in goods cleared without duty payment. The Revenue contended that the respondent should pay an amount under Rule 6(3) of Cenvat Credit Rules due to the lack of separate records for dutiable and exempted goods. The Asstt. Commissioner initially dropped the proceedings, citing Rule 12B exemption for job workers. The Commissioner (Appeals) divided the disputed period, upholding the dropping of Cenvat credit demand for the period when Rule 12B was applicable.

2. The Revenue challenged the Commissioner (Appeals) order, arguing that Rule 12B benefits should not apply to the period before its enforcement. The Tribunal considered the precedents, including the Sterlite Industries case, where the Larger Bench ruled in favor of job workers' Cenvat credit eligibility. The Tribunal rejected the Revenue's appeal, emphasizing that the principles established in previous judgments applied to the current case.

3. The respondent's counsel referenced various judgments, highlighting the consistent stance of allowing Cenvat credit for job workers even if goods were cleared without duty payment. The Tribunal relied on the Sterlite Industries case, upheld by the Bombay High Court, to support the respondent's eligibility for Cenvat credit during the disputed period. The Tribunal dismissed the Revenue's appeal, affirming the job worker's entitlement to Cenvat credit under the prevailing rules and legal precedents.

4. The Tribunal's decision aligned with established legal interpretations and judgments, emphasizing the job worker's right to Cenvat credit under relevant rules. The Tribunal rejected the Revenue's arguments against the applicability of previous judgments, reinforcing the consistent application of legal principles in similar cases. The judgment underscored the importance of adhering to established legal precedents and rules in determining Cenvat credit eligibility for job workers, ultimately dismissing the Revenue's appeal and upholding the respondent's entitlement to Cenvat credit during the disputed period.