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2019 (7) TMI 2044 - AT - Central Excise


Issues: Availment of Cenvat Credit for input services used by job worker unit.

The case involved a dispute regarding the availment of Cenvat Credit by the appellant for input services used by their job worker unit, which was considered a unit of the appellant itself. The department contended that since the services were utilized by the job worker unit and not directly by the appellant's unit, the credit was not admissible.

The appellant argued that they sent inputs to their job worker unit under Rule 4(5)(a) of Cenvat Credit Rules, 2004, and after job work, the final product was cleared on payment of duty. They emphasized that the job work unit exclusively worked for the appellant and did not engage in its manufacturing activities during the relevant period. The appellant relied on CESTAT Mumbai's decision in the case of CCE, Mumbai II vs. Larsen & Tuobro Ltd. to support their claim.

The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order, maintaining that the credit was not admissible.

After considering the arguments and examining the records, the Hon'ble Member (Judicial) concluded that since the inputs were sent to the job worker unit exclusively for carrying out job work for the appellant, the services were used in relation to the manufacture of the final product of the appellant. Referring to Rule 3 of the Cenvat Credit Rules, which allows credit for services used in the manufacture of job work goods under Notification no. 214/86-C.E., the judgment clarified that the principle is entitled to CENVAT Credit even if the job worker does not discharge excise duty but carries out job work on behalf of the principle. Consequently, the impugned orders were set aside, and all the appeals were allowed.

 

 

 

 

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