2011 (3) TMI 1085 - AT - Central Excise

Cenvat credit availed on the inputs used in the manufacture of the final product on job work basis - Revenue denied the credit by observing that the appellant have not been able to maintain separate accounts - Held that - As relying on Sterlite Industries (I) Ltd. Vs. CCE Pune 2004 (12) TMI 108 - CESTAT, MUMBAI wherein held that a job worker is entitled to avail the modvat credit of duty paid on the inputs used by him in the manufacture of the final product cleared payment of duty to the principal manufacturer - Decided in favour of assessee.

Summary

Issues:
- Availment of cenvat credit on inputs used in the manufacture of final product on job work basis.
- Maintainance of separate accounts as per Rule 6(2) of the Cenvat Credit Rules.

Analysis:

Issue 1: Availment of cenvat credit on inputs used in the manufacture of final product on job work basis
The appellants, engaged in manufacturing certain products falling under Chapter 28 & 29 of the Central Excise Tariff Act, were availing modvat credit of duty paid on inputs. The dispute arose regarding the availment of cenvat credit on inputs used in manufacturing the final product on a job work basis. The Revenue contended that the appellant, as a job worker, was not entitled to avail the cenvat credit on inputs used in the final product. The Commissioner (Appeals) initially agreed with the appellant's entitlement to cenvat credit but denied it due to the appellant's failure to maintain separate accounts as per Rule 6(2) of the Cenvat Credit Rules.

Issue 2: Maintenance of separate accounts as per Rule 6(2) of the Cenvat Credit Rules
The Commissioner (Appeals) based the denial of cenvat credit on the appellant's failure to maintain separate accounts as required by Rule 6(2) of the Cenvat Credit Rules. However, upon further examination, the Tribunal found that the issue was already addressed in the Larger Bench decision of Sterlite Industries (I) Ltd. The Tribunal clarified that goods manufactured on a job work basis and cleared to the principal manufacturer should not be equated with exempted goods, thereby allowing the cenvat credit. The Tribunal emphasized that the provisions of Rule 6, which apply in cases of manufacturing dutiable and exempted final products using common inputs, were not applicable in the present scenario. Consequently, the Tribunal set aside the impugned order and allowed the appeal, providing consequential relief to the appellant.

In conclusion, the Tribunal's decision reaffirmed the entitlement of job workers to avail cenvat credit on inputs used in manufacturing final products, emphasizing the inapplicability of Rule 6(2) in such cases. The judgment provided clarity on the issue and upheld the appellant's right to cenvat credit, ultimately disposing of the appeal in favor of the appellant.