2015 (1) TMI 1337 - AT - Central Excise

CENVAT credit - job-work - Held that - the Larger Bench in the case of STERLITE INDUSTRIES (I) LTD. Versus COMMISSIONER OF CENTRAL EXCISE PUNE 2004 (12) TMI 108 - CESTAT MUMBAI took the view that MODVAT credit of duty paid on inputs used in the manufacture of final products cleared without payment of duty for further utilization in the manufacture of final products which are cleared on payment of duty by the principle manufacturer would not be hit by provisions of Rule 57C - appeal allowed - decided in favor of appellant.

Summary

Issues:
CENVAT credit denial, demand of amount with interest, penalty imposition, job work nature of appellants, duty payment by item providers, applicability of MODVAT credit, reliance on Sterlite Industries case, Larger Bench decision, Rule 57C provisions, appeal allowance.

Analysis:
The judgment revolves around the denial of CENVAT credit, demand of a specific amount with interest, and the imposition of a penalty. The appellant argued that they were engaged in job work, and the items provided for job work were already duty-paid by the providers, thus the manufactured products should not be considered exempted final products. The counsel relied on a decision by a Larger Bench in the case of Sterlite Industries, where it was held that MODVAT credit of duty paid on inputs used in manufacturing final products cleared without duty payment, for further use in products cleared with duty payment, is not affected by Rule 57C provisions. Drawing parallels with this decision, the appeal was allowed as the facts were similar, and there was no other consideration required. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief for the appellants.

In conclusion, the judgment highlights the importance of understanding the nature of job work, duty payment by item providers, and the applicability of MODVAT credit in cases where final products are cleared with or without duty payment. By relying on a precedent set by a Larger Bench, the Tribunal allowed the appeal, emphasizing the consistency of facts and circumstances with the previous decision. This case serves as a reminder of the significance of legal precedents and the interpretation of relevant provisions to determine the eligibility of credits and exemptions in indirect tax matters.