2007 (11) TMI 608 - AT - Central Excise

Summary

Issues involved: Appeal against order of Commissioner (Appeals) regarding clearance of capital goods to job workers, eligibility for availing credit, imposition of penalty, and applicability of Notification No.214/86.

Summary:
The appellant, a manufacturer of resins, dyes, and chemicals, received goods like Electric Motors, Gear Boxes, etc., and took credit of duty paid on them as capital goods. They supplied these goods to job workers under Rule 57S(7)/57AC(5)(a) of Central Excise Rules, receiving back sigma machines/reactor vessels for manufacturing excisable goods. The original authority ordered recovery of cenvat credit, imposed penalties, and demanded interest. The Commissioner (Appeals) upheld these decisions.

The appellant argued that Rule 57S permits removal of capital goods to job workers without reversing credit, claiming the assembly done was not full-fledged manufacture but assembly on a job work basis. They also cited an amendment to Notification No.214/86 for eligibility. The SDR contended that full-fledged manufacture occurred at job workers' premises, making the appellant ineligible for credit. The Tribunal found that a new product emerged due to manufacture by job workers, and the clearance by the appellant did not conform to Section 57S conditions.

The Tribunal remanded the matter to the original authority for reconsideration after hearing the appellant, specifically to determine the correct valuation by job workers, the nature of goods returned, and the applicability of Notification No.214/86. The issue of invoking an extended period for duty payment was left open for fresh consideration.