2009 (10) TMI 793 - AT - Central Excise

Summary

Issues: Duty demand on common inputs used for manufacturing dutiable and job work goods; Applicability of Notification 214/86 C.E.; Interpretation of Rule 6(3)(b) of CENVAT Credit Rules, 2004.

Summary:
The case involved M/s Sai Metaplast, engaged in manufacturing metalised films, facing a duty demand of Rs. 74,80,050/- for availing credit on common inputs used for both dutiable and job work goods. The impugned order required them to pay duty under Rule 6(3)(b) of CENVAT Credit Rules, 2004 due to the lack of separate accounts for inputs.

Shri Vipin Jain, representing the appellant, argued citing the Sterlite Industries case that credit on inputs used in job work can be utilized for duty payment on other goods, subject to fulfilling duty payment conditions. The Commissioner's rejection based on Notification 217/86-C.E. and amendments to Rule 57D was contested, emphasizing the continued relevance of the Sterlite Inds. decision.

The Revenue contended that non-production of evidence on duty payment for finished goods under Notification 214/86 was a crucial factor, and highlighted ongoing appeals related to job work for 100% EOU. The Tribunal, after considering arguments, upheld the applicability of the Sterlite Inds. decision, emphasizing the admissibility of credit on inputs used in job work. The rejection of the Revenue's appeal was based on the lack of merit in demanding duty for job work to 100% EOU, exempt from duty under Rule 6(3) of CENVAT Credit Rules, 2004.