2022 (3) TMI 502 - AT - Central Excise

CENVAT Credit - inputs were sent to job worker under Rule 4(5)(a) of CCR,2004 without reversing the Cenvat credit - job worker instead of following the N/N. 214/86-CE, chose to pay the duty on the job worked goods - case of the department is that since the appellant have cleared the cenvatable input under Rule 4(5)(a) of CCR,2004, job worker was not supposed to pay the duty, instead, he was supposed to avail exemption N/N. 214/86-CE - HELD THAT - As per the Cenvat Credit Rules, 2004, an assessee is entitled for the Cenvat Credit in respect of inputs used in relation to the manufacture of final product - In the present case when the appellant have received the input it was duty paid, hence they have were rightly taken the Cenvat Rule 4(5)(a) provides for movement of the input on which Cenvat Credit was availed . Accordingly such input was sent to the job worker in terms of Rule 4(5)(a) - As regard the Notification No. 214/86-CE being a conditional Notification, it is optional for the job worker whether to avail the exemption or to pay the excise duty. The job worker undisputedly being a manufacturer has option either to avail exemption to avail by duty. In the present case job worker chose to pay the duty without availing the Notification No. 204-CE which cannot be objected, as there is no provision for compulsory availment of Notification No. 214/86-CE. As regard the duty paid by the job worker it is very much in relation to the job work goods, which was undisputedly used by the manufacturer of the final product. The appellant had cleared the final product on which duty was paid by the appellant. This tribunal has taken consistent view that in case of payment of duty by the job worker the same is available as a Cenvat Credit to the principal manufacturer - Reliance can be placed in the case of COMMISSIONERS OF CENTRAL EXCISE, CUSTOMS AND SERVICE TAX-VADODARA-I VERSUS M/S SARABHAI CHEMICALS 2015 (10) TMI 1057 - CESTAT AHMEDABAD . Therefore, the issue is not res integra and appellant are entitled for the Cenvat Credit of duty paid by the job worker. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of Cenvat credit in respect of inputs sent to job worker under Rule 4(5)(a) of CCR,2004 without reversing the credit.
- Dispute regarding payment of duty by job worker and its availability as CENVAT Credit to the principal manufacturer.

Analysis:
1. The appellant availed Cenvat credit for inputs sent to job worker under Rule 4(5)(a) without reversing the credit. The department contended that since the job worker cleared the cenvatable input under Rule 4(5)(a), he was not supposed to pay duty but avail exemption under Notification No.214/86-CE. Thus, the duty paid by the job worker should not be available as CENVAT Credit to the appellant.

2. The appellant's counsel argued that regardless of the inputs sent under Rule 4(5)(a), as the job worker paid duty and the goods were used in the final product, Cenvat credit should be admissible. He cited various judgments supporting this view, including Thermax Ltd. vs. CCE, CCE vs. Kohinoor Printers Pvt. Ltd., and CCE vs. Sundaram Auto Components Ltd.

3. The revenue representative reiterated the findings in the impugned order, stating that the job worker should have availed exemption under Notification No. 214/86-CE, and since this was not done, the duty paid by the job worker cannot be allowed as Cenvat credit to the appellant.

4. The Member (Judicial) analyzed the submissions and records, noting that under Cenvat Credit Rules, 2004, an assessee is entitled to credit for inputs used in manufacturing the final product. The appellant rightly availed Cenvat credit for duty-paid inputs sent to the job worker under Rule 4(5)(a). As per the conditional Notification No. 214/86-CE, the job worker had the option to avail exemption or pay duty, and in this case, the job worker chose to pay duty. The duty paid by the job worker was related to the job work goods used in the final product, justifying the admissibility of Cenvat credit. The Member referred to previous tribunal orders supporting this view.

5. The Member further cited judgments such as CCE vs. Kohinoor Printers Pvt. Ltd., CCE vs. Sundaram Auto Components Ltd., and CCE & ST vs. Sarabhai Chemicals, where it was held that the duty paid by the job worker, even if not required, can be availed as credit by the principal manufacturer. The Tribunal consistently supported the view that duty payment by the job worker is available as Cenvat Credit to the principal manufacturer. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief.

This detailed analysis of the judgment highlights the key issues, arguments presented by both sides, legal interpretations, and precedents relied upon to arrive at the decision in favor of the appellant regarding the availment of Cenvat credit for duty paid by the job worker.