2003 (8) TMI 154 - AT - Central Excise

Cenvat/Modvat - Capital goods - Whether M/s. Whirlpool of India Ltd. can clear moulds without reversing the Modvat credit availed thereupon - HELD THAT - It has not been disputed by the Revenue that the appellants are placing purchase orders on suppliers for manufacturing and supplying various washing machine parts. Thus, the suppliers were manufacturing parts as per the design and specification given by the appellants. It is, thus, apparent that the work of manufacturing parts of washing machines has been assigned to the suppliers on job work basis. Mere facts that the suppliers were using their own raw-material for supplying parts of washing machines, cannot take them away from the category of job worker. Sub-rule (8) of Rule 57S of the Central Excise Rules, 1944, clearly provides that a manufacturer may, with the permission of the Commissioner and subject to such terms and conditions and limitation as he may impose, remove the moulds and dyes without payment of duty to job worker for the purpose of production of goods on his behalf and according to his specifications. Sub-rule (8) starts with the words Notwithstanding anything contained in sub-rule (1) and as such is a non obstante clause. This rule clearly empowers the appellants to remove the moulds and dyes without payment of duty to the premises of job worker for the purpose of production of goods on their behalf and according to their specifications. The Tribunal has already held in a number of decisions starting from M/s. Monica Electronics that it is not necessary for the purpose of sub-rule (8) of Rule 57S that only those persons will be termed as 'job workers' whom the raw-materials are supplied to. Thus, we set aside the impugned order and allow all the appeals.

Summary

Issues involved: Whether M/s. Whirlpool of India Ltd. can clear moulds without reversing the Modvat credit availed thereupon.

Summary:
The common issue in four appeals is whether the company can clear moulds without reversing Modvat credit. The company avails Modvat credit for duty paid on moulds and dyes used in manufacturing washing machines. The job workers used their raw materials to manufacture parts according to the company's design. The Assistant Commissioner and Commissioner (Appeals) held that the job workers cannot be considered as such since they purchased their raw materials. The Tribunal clarified that the definition of "job worker" in Rule 57S does not require raw materials to be supplied by the manufacturer. The Tribunal also distinguished previous judgments to support the company's position.

The Revenue argued that the units manufacturing parts of washing machines on their own account cannot be regarded as job workers since they buy raw materials. They contended that the duty must be paid when capital goods are removed for home consumption. The Revenue emphasized the strict interpretation of Rule 57S(8) and the need to supply moulds and dyes to job workers for duty exemption. They referred to principles of statutory interpretation to support their argument.

After considering both sides, it was established that the suppliers were indeed working as job workers for the company, as they manufactured parts according to the company's specifications. Rule 57S(8) allows the removal of moulds and dyes without duty payment to job workers for production on behalf of the company. The Tribunal held that the requirement of supplying raw materials to job workers is not necessary under Rule 57S(8). Therefore, the impugned order was set aside, and all appeals were allowed.