2014 (12) TMI 579 - AT - Central Excise

CENVAT Credit - inputs used for the manufacture of goods on job-work basis - Held that - Lower appellate authority s order is based on the Larger Bench decision in the case of Sterlite Industries (I) Ltd. Commissioner of Central Excise, Pune 2004 (12) TMI 108 - CESTAT, MUMBAI wherein it has been held that MODVAT credit of duty paid on inputs used in the manufacture of final product cleared without payment of duty for further utilisation in manufacture of final product, which are cleared on payment of duty by principal manufacturer, would not be hit by provisions of Rule 57C and the said decision dealt with a job-work situation. The Larger Bench decision was challenged by the Revenue before the hon ble Bombay High Court and the High Court dismissed the appeal of the Revenue as reported in 2008 (8) TMI 783 - BOMBAY HIGH COURT Therefore, the impugned order is in accordance with the law and merits to be upheld - Decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Appeal allowing CENVAT credit on inputs used for manufacturing goods on job-work basis.
- Utilization of CENVAT credit for goods manufactured on job-work basis without payment of duty.
- Interpretation of the Larger Bench decision in the case of Sterlite Industries regarding MODVAT credit.

Analysis:
1. The appeal was filed by the Revenue against an Order-in-Appeal allowing CENVAT credit on inputs used for manufacturing goods on a job-work basis. The Revenue contended that CENVAT credit should only be used for finished products cleared on payment of duty, not for goods manufactured on job-work basis returned to the parent-manufacturer without duty payment. The Revenue relied on Tribunal decisions in support of their argument.

2. The respondent, represented by a consultant, argued that the lower appellate authority's decision was based on the Larger Bench decision in the case of Sterlite Industries. This decision clarified that MODVAT credit on inputs used in manufacturing final products cleared without duty payment for further utilization in products cleared on duty payment by the principal manufacturer is permissible. The respondent highlighted that the Larger Bench decision was upheld by the Bombay High Court, indicating that the lower appellate authority's decision aligns with established law.

3. The Tribunal, after reviewing the arguments from both parties and examining the Sterlite Industries case, concluded that the Larger Bench decision's interpretation covered the issue at hand. The Tribunal found no merit in the Revenue's appeal and dismissed it accordingly. By following the precedent set by the Larger Bench decision and the High Court's affirmation, the Tribunal upheld the lower appellate authority's decision regarding the utilization of CENVAT credit for goods manufactured on a job-work basis without payment of duty.

This comprehensive analysis of the judgment showcases the legal intricacies involved in the interpretation of CENVAT credit utilization for goods manufactured on a job-work basis, emphasizing the significance of precedent-setting decisions like the Sterlite Industries case in guiding such matters.