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2018 (6) TMI 1420 - AT - Central ExciseCENVAT credit - Rule 6(3) of CCR 2004 - Job-work - whether the respondents are required to pay an amount under Rule 6(3) of CCRR 2004 in the fact that the respondents are working as job worker under N/N. 214/86-CE dated 25.03.1986? - Held that - As per 3rd Proviso to Rule 3(1), Even though the goods manufactured under Notification 214/86- CE, the CENVAT Credit in respect of inputs used in the said goods is admissible. Therefore, Rule 6(3) shall not apply in the present case. Reliance placed in the case of STERLITE INDUSTRIES (I) LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, PUNE 2004 (12) TMI 108 - CESTAT, MUMBAI , where it was held that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Appeal dismissed - decided against Revenue.
Issues:
Whether the respondents are required to pay an amount under Rule 6(3) of Cenvat Credit Rules, 2004 due to working as job workers under Notification No. 214/86-CE dated 25.03.1986. Analysis: The department claimed that since the respondents were manufacturing goods for the principal manufacturer on a job work basis and availing exemption under Notification No. 214/1986-CE, they should pay an amount under Rule 6(3) of Cenvat Credit Rules, 2004. The Revenue argued that the goods, though manufactured on a job work basis, were exempted from duty under the said notification, necessitating payment under Rule 6(3). The respondents contended that goods remained dutiable from input stage to final product clearance, challenging the applicability of Rule 6(3). They cited the 3rd Proviso to Rule 3(1) of Cenvat Credit Rules, highlighting that Cenvat Credit is admissible even for goods manufactured under Notification 214/86-CE. They referenced various judgments to support their position. The Tribunal examined the provisions of Rule 6(3) and the 3rd Proviso to Rule 3(1) of Cenvat Credit Rules, 2004. It was noted that Cenvat Credit for inputs used in goods manufactured under Notification 214/86-CE is admissible, rendering Rule 6(3) inapplicable. The Tribunal referred to the decision in Sterlite Industries case, emphasizing the admissibility of credit on inputs used in manufacturing, even if the final product is exempted from duty. The Tribunal further discussed the interpretation of Rule 57C and relevant case laws, including the decision in Escorts Ltd. case. The Tribunal highlighted that the purpose of the rules is to prevent cascading effect and streamline duty payment processes. It was concluded that Modvat credit on inputs used in manufacturing final products cleared without duty payment, but later cleared with duty payment, is permissible. Based on the provisions of Cenvat Credit Rules and the precedents cited, the Tribunal upheld the impugned orders, dismissing the Revenue's appeals. The judgment reaffirmed the admissibility of Cenvat Credit for inputs used in goods manufactured under Notification 214/86-CE, thus negating the need for payment under Rule 6(3). This detailed analysis of the judgment showcases the legal intricacies involved in determining the applicability of Rule 6(3) of Cenvat Credit Rules, 2004 in the context of job work manufacturing under specific notifications and relevant case laws.
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