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Principal manufacturer eligible to take credit of duty so paid by job-worker |
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Principal manufacturer eligible to take credit of duty so paid by job-worker
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Principal manufacturer eligible to take credit of duty so paid by job-workerThe Department has denied credit of duty paid by job-worker to Sundaram Auto Components Ltd., principal manufacturer (“the Respondent”) on the ground that the job-worker had paid duty even when he was not required to pay in terms of Notification No. 214/86-CE dated March 25, 1986. Thus, the Respondent has availed double benefits by claiming credit of duty paid to supplier of inputs & duty paid and collected by job-worker. The Hon’ble High Court of Madras relying upon the following judgments:
held that credit of duty paid by job-worker can be availed by the principal manufacturer, even if job-worker forgoes exemption and pay duty on semi-processed goods returned to the principal-manufacturer. It was further held that the Respondent did not claim credit twice as it only claimed credit of (a) duty paid to supplier of inputs; and (b) duty paid and collected by job-worker, which, even according to the Department, was not payable by job-worker. Since duty was paid by the Respondent both times, Cenvat credit was available and same cannot be construed as double benefit by applying theory of unjust enrichment
By: Bimal jain - November 17, 2015
Discussions to this article
Sir Is the credit of Service tax paid by the Job worker will also be available to the principal manufacturer even though the service is exempted u/n no. 25/2012 point no. 30 C if the final product is cleared on payment of Duty? If we apply the logic of unjust enrichment similar to the excise duty paid by the job worker can the service tax paid by the job worker stand the test of law?
These all are subjective issues and may be decided as per individual facts of the case..Regards
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