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2015 (11) TMI 367 - AT - Central ExciseDenial of refund claim - Reversal of CENVAT Credit - Non maintenance of separate accounts - exemption from payment of duty at job workers(Appellant) but in terms of Notification 214/86CE - Held that - Goods which are cleared without payment of duty and on the payment of 8% under Rule 57-CC is manufactured as job work goods under Rule 57F (3) and under exemption notification No. 214/86 therefore Cenvat credit is not deniable on the input used in the manufacture of job work goods at the job worker s end. Though it is covered by Notification No. 214/86 but it is not exempted from payment of excise duty whereas it only temporary defers the excise duty liability for the reason that as per the condition of notification No. 214/86 principal is required to pay excise duty on the final product or if job work is removed as such therefore it cannot be said that job work goods cleared without payment of duty is exempted goods. - in case of input used in the job work goods manufactured and cleared under Notification 214/86-CE dated 25/3/1986, neither Cenvat Credit can be denied nor demand under Rule 57 CC can be made. - impugned order is set aside - Decided in favour of assessee.
Issues:
Refund claim rejection under Central Excise Rules, applicability of Rule 57 CC, interpretation of Notification No. 214/86-CE, relevance of judgments in similar cases. Analysis: The appeal challenged the rejection of a refund claim by the Commissioner (Appeals) under Central Excise Rules. The appellant, a manufacturer of excisable goods, filed a refund claim of Rs. 1,52,410, seeking a refund of differential duty. The dispute arose as the appellant had not reversed the cenvat credit of Rs. 50,758 on their raw material used in the manufacture of an exempted product. The Asstt. Commissioner rejected the claim, citing the appellant's failure to maintain separate accounts for inputs used in exempted products. The Commissioner (Appeals) upheld this decision, leading to the appeal before the CESTAT. The main contention was the applicability of Rule 57 CC and the interpretation of Notification No. 214/86-CE regarding the payment of 8% of value of exempted goods. The appellant argued that their case fell under the judgment of Max India Ltd., where a similar situation was ruled in favor of the appellant. The appellant emphasized that the goods cleared without payment of duty were not exempted but only had a deferred excise duty liability under the notification. The CESTAT agreed with the appellant's arguments, citing the Max India Ltd. case and other relevant judgments where it was held that Cenvat credit cannot be denied nor can a demand under Rule 57 CC be made for goods cleared under Notification 214/86-CE. The CESTAT highlighted that the appellant had already reversed the credit taken on inputs used in the manufacture of goods cleared under job work, further supporting the decision to set aside the demand for 8% payment under Rule 57 CC. The Tribunal referred to past judgments like Indian Smelting & Refining Co. Ltd. and Jindal Polymers, reinforcing the legal position that in cases of job work goods cleared under Notification 214/86-CE, Cenvat credit cannot be denied. The CESTAT ultimately allowed the appeal, setting aside the impugned order and ruling in favor of the appellant based on established legal principles and precedents. In conclusion, the CESTAT's detailed analysis focused on the correct interpretation of Central Excise Rules, the specific provisions of Rule 57 CC, and the significance of Notification No. 214/86-CE in relation to the appellant's refund claim. The judgment provided a thorough examination of relevant case laws and legal principles to support the decision to allow the appeal and grant the appellant relief in line with established legal precedents.
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