2017 (6) TMI 1394 - HC - Central Excise

CENVAT Credit - goods manufactured on job work basis on which no duty was paid by the respondent are exempted goods or not - applicability of principles of jurisprudence - HELD THAT - The assessee takes credit on raw materials used in the manufacture of polyester chips as also on input services. One item of such input service is service of Goods Transport Agency for transporting the polyester chips to the factory of their principal. The period of dispute is January, 2007 to July, 2008. Larger Bench s judgment of Tribunal in Sterlite Industries (I) Ltd. 2004 (12) TMI 108 - CESTAT, MUMBAI (LB) rightly found that there is no difference between input and input services credit as the issue is same in clear terms of Notification No. 214/86, therefore, denial of credit cannot be upheld. The findings recorded by the Tribunal are the finding of facts - there are no substantial question of law for consideration - appeal dismissed.

Summary

Issues involved: Interpretation of Cenvat Credit Rules, 2004 u/s Rule 6(1), applicability of exemption on goods manufactured on job work basis, consideration of input services for credit, justification of Tribunal's order, effect of judicial pronouncements and government circulars.

Interpretation of Rule 6(1) of Cenvat Credit Rules:
The appeal raised substantial questions regarding the correctness of the Customs, Excise and Service Tax Appellate Tribunal's decision on the applicability of Rule 6(1) of the Cenvat Credit Rules. The Tribunal's order questioned whether goods manufactured on job work basis without duty payment are exempted goods and if Rule 6(1) is not applicable in such cases.

Consideration of Input Services for Credit:
The case involved the manufacturing of goods on job work basis, some attracting excise duty while others were exempted. The appellant claimed credit on raw materials and input services, including Goods Transport Agency services for transporting goods. The dispute spanned from January 2007 to July 2008.

Justification of Tribunal's Order:
The Additional Commissioner of Customs imposed duty and a penalty, which was challenged in appeals. The Tribunal accepted the appeal, setting aside the demand for credit of outward transportation. The Tribunal's decision was based on the interpretation of the law declared by the Larger Bench in a previous case, emphasizing the equivalence of 'input' and 'input services' credit.

Effect of Judicial Pronouncements and Government Circulars:
The Tribunal's findings, supported by the judgment in Sterlite Industries (I) Ltd. v. CCE, highlighted the importance of applying the law declared by the Larger Bench to credit availability for both inputs and input services. The Tribunal's decision was upheld, emphasizing that denial of credit on inputs or input services for goods cleared for job work under Notification No. 214/86 cannot be justified.

Conclusion:
The High Court dismissed the appeal, stating that the Tribunal's findings were based on facts and did not raise any substantial question of law for consideration. The decision affirmed the equivalence of 'input' and 'input services' credit under the Cenvat Credit Rules, emphasizing the application of judicial precedents in determining credit availability.