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2019 (1) TMI 1381 - AT - Central ExciseCenvat credit disallowed - Clearance of goods directly from the job worker premises - Unregistered premises / division of the same assessee - Notification No. 39/2001 dated 03.07.2001 - Penalty - Confiscation of raw material - Trade Notice 36/2003 dt. 27.03.2003 - Held that - from the letter dated 05.05.2005 of the appellant that they have stated all the facts of job work right from the setting up the Jamnagar Mobile Plant upto discharge of duty by SP and SSTP Division. The revenue has alleged that even though they had permitted the clearance of the finished goods directly from the job worker but their objection to direct receipt of raw material at job worker premises i.e. Jamnagar mobile Plant and the clearance of the finished goods directly to customer is only paper transaction. We are of the view that the principal manufacturer as well as the job worker both are merely Division of RTML. It is only a case where one division allotted the work to another. The demand of cenvat on the one hand from the principal manufacturer on raw material which reached to the job worker and demand of duty from the job worker on the finished goods manufactured from such raw material itself proves that the raw material was used for the intended purpose only. Thus in such case the cenvat credit to the principal manufacturer i.e SP and SSTP Division cannot be denied. We also find that one of the reason for demanding duty from the job worker unit is that the certificates issued under Notification No. 108/95 CE dated 28.08.1995 did not contain its name. In this context we find that it is not disputed that the job workers had manufactured finished goods on job work basis on behalf of principal who has cleared the goods to the intended recipient. In such case we do not find any reason to demand duty from the job worker. As far as demand of cenvat credit against SSTP plant and SP plant is concerned we find that it is not in dispute that the goods were manufactured on their behalf by Jamnagar Mobile Plant who is job worker. Thus for all purposes it is SSTP and SP Plant who are the principal manufacturer and the credit has been rightly availed by them. Further once both the plants were given permission to clear the job work goods directly from the premises of the job worker, it itself shows that both the divisions were considered as principal manufacturer and eligible for credit of the raw material so used by the job worker. As regard contention of the Appellant that the demands are time barred, we find that the issue involved is interpretation of job work rules and procedure and not of causing intentional loss of revenue. Whatever goods were cleared were either exempted from duty under Notification No. 108/95- CE dated 28.08.1995 or were cleared for exports or were cleared into domestic market on payment of applicable duty. All the receipts of raw material and the clearance of finished goods stands recorded in statutory books. Moreover it is also a fact that all the division which availed credit or from which the finished goods were cleared belong to the same company and the duty if payable by one division was availed as credit to other division or was refundable - decided in favor of the assessee.
Issues Involved:
1. Disallowance of Cenvat Credit 2. Demand of Central Excise Duty 3. Misuse of Exemption Notifications 4. Compliance with Job Work Provisions 5. Validity of Certificates under Exemption Notifications 6. Admissibility of Cenvat Credit for Exports 7. Maintenance of Separate Accounts under Rule 6 of CCR 8. Time Bar for Demand Detailed Analysis: 1. Disallowance of Cenvat Credit: The Appellant was denied Cenvat credit on raw materials used in various divisions, including SSTP, SP, and Kutch, on grounds that the raw materials were directly sent to job workers without being received by the principal manufacturer. The Tribunal found that the Jamnagar Mobile Plant and Dehgam Mobile Plant were temporary extensions of the main plants and the manufacturing process was disclosed and permitted by the authorities. The Tribunal ruled that the principal manufacturers (SP and SSTP Divisions) rightly availed the Cenvat credit since the job workers were part of the same entity and the raw materials were used for the intended purpose. 2. Demand of Central Excise Duty: The revenue demanded duty from job workers like Jamnagar Mobile Plant and Dehgam Mobile Plant, arguing that they were the actual manufacturers. The Tribunal held that the principal manufacturers (SP and SSTP Divisions) were the rightful entities to clear the goods, as they had the necessary permissions and the goods were cleared to the intended recipients. The Tribunal also noted that the duty demand from job workers was not justified since the goods were eligible for exemption under Notification No. 108/95-CE. 3. Misuse of Exemption Notifications: The revenue contended that the Appellant misused Notification No. 108/95-CE by not mentioning the job workers in the certificates. The Tribunal referenced the High Court and Supreme Court judgments, emphasizing that the exemption cannot be denied if the goods were used for the intended purpose, regardless of whether the job worker's name appeared on the certificate. 4. Compliance with Job Work Provisions: The revenue argued that the Appellant did not follow the provisions under Notification No. 214/86-CE for job work, thus making the job workers liable for duty. The Tribunal found that the job workers were merely extensions of the principal manufacturers, who had disclosed their procedures and obtained necessary permissions. Therefore, the principal manufacturers were compliant with the job work provisions. 5. Validity of Certificates under Exemption Notifications: The Tribunal held that the exemption under Notification No. 108/95-CE was valid even if the job worker's name was not on the certificate, as long as the goods were supplied for the intended project. This was supported by previous judgments, which stated that the exemption should be construed liberally. 6. Admissibility of Cenvat Credit for Exports: For exported goods, the Tribunal ruled that the Appellant was entitled to Cenvat credit, as the job work was conducted under Rule 4(5)(a) of the CCR, and the goods were exported by the principal manufacturers. The Tribunal emphasized that procedural infractions should not lead to denial of credit if the goods were ultimately exported. 7. Maintenance of Separate Accounts under Rule 6 of CCR: The Appellant reversed 10% of the value of exempted goods instead of maintaining separate accounts for HR Plates. The Tribunal found this acceptable under Rule 6(3) of the CCR, as the Appellant had the option to either maintain separate accounts or reverse the credit. 8. Time Bar for Demand: The Tribunal found that the demands were time-barred, as the issue involved interpretation of job work rules and not intentional evasion of duty. The Appellant had disclosed all facts and followed statutory procedures, making the extended period for demand inapplicable. Conclusion: The Tribunal set aside the demands and penalties against the Appellant, holding that the principal manufacturers were entitled to Cenvat credit and the job workers were not liable for duty. The Tribunal also ruled that the demands were time-barred and procedural infractions should not lead to denial of benefits. All appeals were allowed with consequential reliefs.
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