2018 (9) TMI 160 - AT - Central Excise

Whether the demand under Rule 6 is sustainable in case CENVAT credit is availed in respect of input, input services and capital goods against the manufacturing of goods on job work basis under Notification No. 214/86-CE dated 25/03/1986? Held that - Even as per explanation of Rule 3 of Cenvat Credit Rules, 2004, there is specific provision that even though goods are manufactured under Notification No. 214/86-CE and no duty is paid by job worker, job worker is allowed to avail the cenvat credit. Demand do not sustain - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Whether demand under Rule 6 is sustainable in case cenvat credit is availed for manufacturing goods on job work basis under Notification No. 214/86-CE.

Analysis:
The issue in this case revolves around the sustainability of the demand under Rule 6 concerning the availing of cenvat credit for manufacturing goods on a job work basis under Notification No. 214/86-CE. The appellant's representative referred to previous Tribunal orders and judgments such as Sterline Industries Ltd Vs. CCE, Pune 2005, and others to support their case.

The appellant argued that the Tribunal had previously decided a similar issue in their favor in the case of m/s meghmani Dyes & Intermediates Ltd., holding that the credit is admissible and Rule 6 of Cenvat Credit Rules is not applicable. The appellant contended that even though goods are manufactured under Notification No. 214/86-CE and no duty is paid by the job worker, the job worker is allowed to avail the cenvat credit. The Tribunal found that the explanation of Rule 3 of Cenvat Credit Rules, 2004, specifically provides for this scenario.

After considering the submissions from both sides, the Tribunal concluded that the demand under Rule 6 raised by the Lower Authority does not sustain. The Tribunal emphasized the specific provision under Rule 3 of Cenvat Credit Rules, 2004, and the previous Tribunal order in a similar case, leading to the decision to set aside the impugned order and allow the appeals. The judgment highlights the importance of interpreting and applying the relevant rules and precedents in determining the admissibility of cenvat credit in cases of manufacturing goods on a job work basis under specific notifications.