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2019 (8) TMI 1169 - AT - Central ExciseCENVAT Credit - Job-Work - furnace oil is used in the manufacture of final product on job work basis - denial of credit on the ground that since the job work goods is exempted from payment of duty, credit in respect of furnace oil is not admissible - liability to pay 10% of the value of the goods - N/N. 214/86-CE dated 25.03.1986 - HELD THAT - The credit is allowed in respect of inputs used in the manufacture of goods under N/N. 214/86-CE despite the fact that job worker is not supposed to pay the duty when the goods are manufactured under N/N. 214/86-CE. This is for the reason that goods manufactured under N/N. 214/86-CE is not otherwise exempted as the notification contained a condition that the job work goods subsequently shall be used in the further manufacture by the principal and the same would be cleared on payment of duty. Therefore, N/N. 214/86 has practically not given any exemption to any goods. There is no doubt that in case the goods manufactured under job work under N/N. 214/86-CE, credit cannot be denied on the ground that goods manufactured under N/N. 214/86-CE is exempted. Appeal allowed - decided in favor of appellant.
Issues Involved:
Whether the appellant is liable to pay 10% of the value of the goods when furnace oil is used in the manufacture of the final product on a job work basis under Notification No. 214/86-CE dated 25.03.1986. Detailed Analysis: Issue 1: Cenvat Credit Entitlement The main issue in this case was whether the appellant is entitled to Cenvat credit in respect of furnace oil used in the manufacture of job work goods under Notification No. 214/86-CE dated 25.03.1986. The lower authorities denied the credit on the basis that since the job work goods were exempted from payment of duty, credit for furnace oil was not admissible. However, the tribunal referred to Rule 3(1) of Cenvat Credit Rules, 2002, which allows credit for inputs used in the manufacture of goods under Notification No. 214/86-CE. The tribunal noted that the notification did not provide exemption to the goods, as they were to be used in further manufacture by the principal and cleared on payment of duty. Therefore, the tribunal concluded that credit cannot be denied based on the exemption status of the job work goods under Notification No. 214/86-CE. Precedents and Legal Interpretation The appellant relied on a previous case where a similar issue was decided in their favor. The tribunal found that the judgments cited by the Revenue did not address the specific situation of goods manufactured under Notification No. 214/86-CE. The tribunal emphasized that the exemption under this notification did not extend to the goods themselves but rather to the subsequent use of those goods in further manufacture by the principal. Therefore, the tribunal held that credit cannot be denied solely based on the exemption status of the job work goods. Conclusion After considering the arguments and legal provisions, the tribunal concluded that in cases where goods are manufactured under job work under Notification No. 214/86-CE, credit cannot be denied on the grounds of exemption. Consequently, the tribunal set aside the impugned order and allowed the appeal in favor of the appellant.
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