2015 (9) TMI 119 - HC - Central Excise

Denial of CENVAT Credit - Job work - Whether in the facts and circumstances of the case, the first respondent Appellate Tribunal is right in holding that the second respondent is entitled to Cenvat credit on the capital goods/inputs used in the manufacture of goods which are exempted and which are cleared without payment of duty on Job work basis - Held that - assessee had manufactured machine forgings on job work basis and supplied the same to the principal manufacturers without payment of duty. The assessee were also manufacturing similar goods on their and the same were cleared on payment of duty to independent buyers. In such duty payments, the assessee utilized Cenvat credit on capital goods and inputs which were used in the manufacture of the job-worked goods, which was objected to by the Department. Hence show cause notice was issued alleging that as the inputs have been used in the manufacture of final products which were cleared without payment of duty, any cenvat credit of the duty paid on such inputs would not be available. The Adjudicating Authority sustained the allegations and ordered recovery of the cenvat credits in question. On appeal, at the instance of the assessee, the Commissioner (Appeals) upheld the order of the Adjudicating Authority, against which appeal has been filed before the Tribunal by the assessee. - Both sides fairly conceded before this Court that the issue involved in these appeals are decided by this Court reported in 2014 (9) TMI 444 - Madras High Court (Commissioner Versus Hwashin Automotive India Pvt. Ltd.), wherein by following the unreported decision, similar question raised by the Revenue was answered against the Revenue. - Decided against Revenue.

Summary

Issues:
1. Entitlement to Cenvat credit on capital goods/inputs used in the manufacture of exempted goods cleared without duty on Job work basis.

Analysis:

Issue 1: Entitlement to Cenvat credit
The case involved a dispute regarding the entitlement of Cenvat credit on capital goods and inputs used in the manufacture of goods that were exempted and cleared without payment of duty on a job work basis. The assessee had manufactured machine forgings on a job work basis and supplied them to principal manufacturers without duty payment. The Department objected to the utilization of Cenvat credit on capital goods and inputs used in the manufacturing process. The Adjudicating Authority upheld the objection and ordered the recovery of the Cenvat credits. On appeal, the Commissioner (Appeals) also supported the Adjudicating Authority's decision. However, the Tribunal allowed the appeal based on a previous decision and held that the goods cleared without duty payment were not to be treated as exempted from duty, thus allowing the Cenvat credit. The Revenue filed the present appeals challenging the Tribunal's decision.

Analysis:
The High Court referred to a previous decision where a similar question was answered against the Revenue. The Court highlighted that the issue in the present appeals had already been addressed in the previous decision. The Court noted that the previous decision relied on judgments from the Bombay High Court and the Punjab and Haryana High Court, as well as a decision of the Apex Court. Following the precedent set by the previous decision, the Court dismissed the current Civil Miscellaneous Appeals, stating that the questions raised stood answered against the Revenue. Consequently, the connected Miscellaneous Petitions were also dismissed, and no costs were awarded.

This detailed analysis of the judgment showcases the legal intricacies involved in determining the entitlement to Cenvat credit on capital goods and inputs used in the manufacture of goods cleared without duty payment on a job work basis. The High Court's decision was based on established legal precedents and interpretations of relevant laws and regulations, providing clarity on the issue at hand.