2017 (12) TMI 1308 - AT - Central Excise

CENVAT credit - denial on the premise that the appellant is a job worker and working under N/N. 214/86-CE dated 25/03/1986 as they are not required to pay duty on the goods manufactured by them on job work basis, therefore, in terms of Rule 6 (1) of CCR, 2004, credit not allowed - Held that - It is admitted fact that the goods manufactured by the appellant are not exempted goods, but being a job worker, the appellant is not required to pay duty therefore it cannot be said the goods manufactured by the appellant are exempted goods - Cenvat credit cannot be denied to the appellant in terms of Rule 6 (1) of CCR, 2004 - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Cenvat credit denial based on job worker status and Notification No. 214/86-CE.

Analysis:
The judgment dealt with the denial of Cenvat credit to the appellant, categorized as a job worker, under Rule 6(1) of the Cenvat Credit Rules, 2004. The appellant's entitlement to avail Cenvat credit was challenged due to their job worker status, as they were not required to pay duty on goods manufactured on a job work basis. The issue was analyzed in light of a previous case before the Hon'ble High Court Punjab & Haryana involving CCE vs. Happy Forging Ltd. The High Court clarified that Cenvat credit could be availed by a job worker, subject to the final manufacturer paying the duty, as per Notification No. 214/86-C.E. The judgment emphasized that the purpose of the notification and the Rules was to streamline duty payment and prevent cascading effects. It highlighted that even if duty was not paid on intermediate products, credit would still be allowed as long as duty was paid on the final product. The High Court's decision supported the appellant's claim for Cenvat credit, as the goods manufactured were not considered exempted goods, despite the appellant's job worker status exempting them from duty payment. Therefore, the denial of Cenvat credit based on Rule 6(1) was deemed incorrect, and the appellant was held entitled to avail the credit.

In conclusion, the appellate tribunal ruled in favor of the appellant, setting aside the impugned order that denied Cenvat credit. The judgment affirmed that the appellant had correctly availed the credit, as the goods manufactured were not exempted goods, and the appellant's job worker status did not warrant denial of Cenvat credit under Rule 6(1) of the Cenvat Credit Rules, 2004. The appeal was allowed with consequential relief, if any, based on the analysis and findings presented in the judgment.