2017 (6) TMI 209 - AT - Central Excise

Job-work - benefit of N/N. 214/86 dt. 25.03.1986 - clearance of chenille yarn without payment of duty - The contention of the appellant is that they received the duty paid inputs under Rule 4(5)(a) of the CCR 2002 and thus they were therefore not required to pay duty while sending the goods back to Principal Manufacturer - Held that - the issue in this case is no longer res integra and is covered by the judgment of this Tribunal in the case of Dhana Singh Synthetics Pvt. Ltd. Vs. CCE Vapi 2015 (11) TMI 38 - CESTAT AHMEDABAD where it was held that Duty on inputs used in the manufacture of final products cleared without payment of duty for further utilisation in manufacture of final product which were cleared on payment of duty by principal manufacturer on job work basis not hit by provisions of Rule 57F of erstwhile Rule - demand set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
- Interpretation of Notification No. 214/86 regarding duty payment on chenille yarn supplied on job work basis.
- Applicability of Rule 4(5)(a) of Cenvat Credit Rules, 2002 in exempting job workers from duty payment.
- Comparison with similar cases and judgments for precedent.

Analysis:

Issue 1: Interpretation of Notification No. 214/86
The case involved a dispute regarding the duty payment on chenille yarn supplied on job work basis. The appellant claimed the benefit of Notification No. 214/86, but the Revenue contended that the benefit was not available as the chenille yarn was used in the manufacture of fabric not covered by the notification. The Tribunal found that the appellant received duty paid inputs under Rule 4(5)(a) of the Cenvat Credit Rules, 2002, and produced a certificate from the Principal Manufacturer to support this claim. It was established that the principal manufacturer had discharged duty on the final product, leading to the conclusion that the appellant was not required to pay duty on the chenille yarn supplied.

Issue 2: Applicability of Rule 4(5)(a) of Cenvat Credit Rules, 2002
The Revenue argued that Rule 4(5)(a) of the Cenvat Credit Rules, 2002 did not exempt job workers from duty payment. However, the appellant relied on a Tribunal judgment in a similar case to support their position. The Tribunal referred to the judgment in Dhana Singh Synthetics Pvt. Ltd. Vs. CCE, Vapi, where it was clarified that duty liability is on the manufacturer, not the job worker, for goods processed on job work basis. The Tribunal emphasized that the job worker's duty payment enables the principal manufacturer to avail Cenvat credit, ensuring revenue neutrality.

Issue 3: Comparison with similar cases and judgments
The Tribunal compared the present case with the judgment in Dhana Singh Synthetics Pvt. Ltd. Vs. CCE, Vapi, where a similar dispute was resolved in favor of the appellant. The Tribunal highlighted the principles established in previous cases regarding duty payment on job work materials and upheld the order of the Commissioner (Appeals) based on consistency with precedent. Additionally, the Tribunal noted that the Revenue failed to provide evidence linking the present case to Notification No. 214/86, further supporting the appellant's position.

In conclusion, the Tribunal dismissed the Revenue's appeal, citing the consistency with previous judgments and the lack of evidence supporting the Revenue's claims. The order of the Commissioner (Appeals) was upheld, emphasizing the legal and proper nature of the decision based on established legal principles and precedents.