2010 (10) TMI 181 - HC - Central Excise

Cenvat credit If the job worker was not liable to pay excise duty while returning the manufactured goods to the supplier of raw materials, then the question of the supplier of the raw materials claiming full credit under Rule 57B of the Central Excise Rules, 1944 does not arise at all. - Tribunal is directed to dispose of the matter afresh in accordance with law

Summary

Issues:
Interpretation of Rule 57-B of the Central Excise Rules, 1944 regarding Higher Notional Credit availability for job workers compared to independent SSI Units.

Analysis:
The case involved an application filed by the Commissioner of Central Excise against a decision of the Central Excise and Gold (Control) Appellate Tribunal. The main issue revolved around the interpretation of Rule 57-B of the erstwhile Central Excise Rules, 1944, specifically concerning the availability of Higher Notional Credit. The question raised was whether this credit was limited to independent Small Scale Industrial (SSI) Units or also extended to job workers who carried out manufacturing activities on raw materials supplied by the principal manufacturer.

The respondent, Central Cables Pvt. Ltd., had purchased raw materials and transferred them to job workers for manufacturing intermediate products. The job workers returned the manufactured goods and wastes to the respondent. The Central Cables Pvt. Ltd. claimed full credit under Rule 57-B of the Central Excise Rules, 1944. However, the issue of how job workers could take credit for duty paid by the respondent on raw materials under actual user conditions was not addressed by the authorities. Similarly, the question of liability for duty payment by the job workers upon returning the goods to the supplier was not considered. The disagreement in the interpretation of these aspects led to the decision to remand the matter back to the CEGAT for a fresh determination in accordance with the law.

The learned Counsel on both sides agreed to quash and set aside the CEGAT's order dated 24-12-2002, and the Tribunal was directed to reconsider the issues raised in the application. Consequently, the reference was allowed, the CEGAT's order was annulled, and the Tribunal was instructed to reexamine the matter in compliance with legal provisions. No costs were awarded in this disposal of the reference.