2010 (3) TMI 1056 - AT - Central Excise

Summary

Issues:
- Benefit of Rule 57AD(2) of the Central Excise Rules, 1944 and Rule 6(2) of the Cenvat Credit Rules extended to fuels including furnace oil.
- Availability of Cenvat credit for duty paid on inputs used in job work.
- Applicability of Rule 57C to job workers claiming Modvat credit.
- Dismissal of appeal against Tribunal's Larger Bench decision in Sterlite Industries case.
- Entitlement to re-credit of Cenvat credit without raising unjust enrichment plea.

Analysis:

1. Benefit of Rule 57AD(2) and Rule 6(2) for fuels including furnace oil:
The appeal by the Revenue contested the extension of benefits under Rule 57AD(2) and Rule 6(2) to fuels like furnace oil. The respondent claimed re-credit of Cenvat credit reversed earlier, asserting entitlement to Cenvat credit for duty paid on furnace oil used in job work. The Tribunal referred to the Larger Bench decision in Sterlite Industries case, emphasizing the availability of Cenvat credit for such inputs.

2. Availability of Cenvat credit for duty paid on inputs in job work:
The Tribunal, following the Apex Court's ruling in Escorts Ltd case, held that job workers could avail Modvat credit for duty paid on inputs used in manufacturing final products cleared without duty payment. This decision was based on the premise that Rule 57C did not apply to job workers claiming Modvat credit, as the job-worked goods were not considered "exempted" under Rule 57C.

3. Applicability of Rule 57C to job workers claiming Modvat credit:
The Tribunal clarified that Rule 57C did not restrict job workers from claiming Modvat credit on inputs used in job-worked goods. The Larger Bench's decision in Sterlite Industries case, upheld by the High Court, affirmed this position, allowing job workers to avail such credits without being subject to Rule 57C restrictions.

4. Dismissal of appeal against Tribunal's Larger Bench decision:
The High Court's dismissal of the department's appeal against the Tribunal's decision in Sterlite Industries case confirmed the validity of the Larger Bench's ruling. This dismissal, based on the absence of a legal question, solidified the position that job workers could claim Cenvat credit for duty paid on inputs used in job work.

5. Entitlement to re-credit of Cenvat credit without unjust enrichment plea:
In line with the Tribunal's Larger Bench decision, the respondent was deemed entitled to re-credit the Cenvat credit in question without the appellant raising the plea of unjust enrichment. The appeal was ultimately dismissed, affirming the respondent's right to the Cenvat credit re-claim without unjust enrichment considerations.