2011 (7) TMI 331 - AT - Central Excise

Cenvat credit - Job worker - goods manufacture for M/s. Hindustan Lever Limited (HUL) located in SEZ - HUL send inputs and packing materials under the provisions of Notification No. 52/2000-CE dated 19.10.2000 - Revenue submitted that under rule 3(1), respondents was not eligible for availing credit, it has to noted that once the respondent is treated as manufacturer, he is eligible to take the credit - Since all the goods manufactured have been exported, question of payment of duty or availing exemption, does not arise - It is settled law that export goods cannot be treated as exempted goods - Therefore, credit is available to the respondents - Decided in favour of assessee,

Summary

Issues:
1. Entitlement to cenvat credit by a job worker under Rule 3(1) of the Cenvat Credit Rules, 2002.
2. Interpretation of provisions of Notification No. 52/2000-CE dated 19.10.2000 regarding credit availment.
3. Eligibility of manufacturer to take credit for exported goods.

Analysis:

Issue 1: The respondent, a job worker, took cenvat credit of duty paid on inputs sent by a company located in a Special Economic Zone (SEZ). The Revenue argued that as a job worker, the respondent was not entitled to cenvat credit under Rule 3(1) of the Cenvat Credit Rules, 2002. However, the respondent contended that as per settled law, a job worker is considered a manufacturer and thus eligible for credit, especially when goods are exported. The Tribunal found that the show cause notice proposing duty demand based on the respondent being a job worker was incorrect as the respondent was not availing a specific notification. Therefore, the department's appeal was rejected on this ground.

Issue 2: The Revenue further contended that the duty demand should be confirmed on the basis that the respondent was manufacturing exempted goods, thus not eligible for credit under Rule 6(1) of the Cenvat Credit Rules. However, the respondent argued that the goods were exported, making them ineligible to be treated as exempted goods. The Tribunal agreed with the respondent, stating that export goods cannot be considered exempted, and the respondent, being treated as a manufacturer, was entitled to take credit. Additionally, the Tribunal noted that the Commissioner correctly interpreted the provisions of Notification No. 52/2000-CE, further supporting the respondent's position.

Issue 3: The Tribunal considered the eligibility of the manufacturer to take credit for exported goods. Since all goods manufactured were exported, the question of duty payment or availing exemption did not arise. It was established that the law permits SEZ units to process goods outside the SEZ and export them directly, without bringing them back to the SEZ. In this case, the goods were exported after processing, making the manufacturer eligible to take credit. Consequently, the Tribunal rejected the Revenue's appeal and disposed of the cross objection filed by the respondents.

This judgment clarifies the entitlement of job workers to cenvat credit, the treatment of exported goods, and the interpretation of relevant notifications, providing a comprehensive analysis of the issues involved.