2016 (12) TMI 1445 - AT - Central Excise

Cenvat credit on raw material - NNo.214/86-CE - Interest - Penalty - Held that - It is the case of appellant that mentioning the notification number was due to mistake and as the invoices specifies the excise duty, the mention of notification number is not of much relevance. It is also not disputed that appellant has not filed an undertaking complying with the condition laid in the Notification No.214/86 so as to avail the exemption - The job worker has paid duty in the instant case and the appellant has availed credit on the said duty - Decided in favor of the assessee.

Summary

Issues:
1. Applicability of Notification No. 214/86-CE on duty payment by job worker.
2. Validity of availing Cenvat credit on duty paid by job worker.
3. Interpretation of conditions under Notification No. 214/86 for exemption.

Analysis:
1. The case involved the manufacture of ceramic glazed tiles with a job worker processing intermediate products under Chapter 32 of CETA, 1985. The dispute arose when the job worker paid excise duty on the intermediate product, leading the department to question the duty payment due to raw materials being supplied free. The appellant availed Cenvat credit on these raw materials supplied to the job worker, which was challenged through show cause notices and subsequent penalties.

2. The appellant argued that the job worker's duty payment under Notification No. 214/86-CE was optional and did not preclude them from paying duty. They contended that even if the job worker was not liable to pay duty, the appellant should not be denied credit. The appellant highlighted discrepancies in invoices mentioning the notification number, attributing it to inadvertent errors. They also emphasized the lack of evidence showing the job worker availed exemption under Notification No. 214/86.

3. The Tribunal examined various judgments, including CCE Vs. Rohan Dyes, Bright Steel MAC Fabrics Vs. CCE, and Kohinoor Printers Pvt. Ltd. Vs. CCE, to analyze the applicability of Notification No. 214/86. The Tribunal observed that the job worker's duty payment did not necessarily require availing the exemption, and the appellant could rightfully avail credit on duty paid by the job worker. It was noted that the notification shifted the duty payment liability to the raw material supplier, allowing the job worker to pay duty without availing the exemption. Consequently, the Tribunal ruled in favor of the appellant, setting aside the demand and penalties imposed by the department.

This detailed analysis of the judgment showcases the legal intricacies surrounding the applicability of Notification No. 214/86-CE and the rights of both the job worker and the principal manufacturer in availing Cenvat credit on duty paid.