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2013 (9) TMI 344 - AT - Central ExciseCENVAT credit - SSI Exemption - Value Based Exemption under Notification no. 8/2003 - Revenue was of the view that in terms of Rule 11(2) of CENVAT Credit Rules, 2004, a manufacturer who opted for exemption based on value or quantity, the balance of CENVAT credit account would lapse and shall not be allowed to utilize for payment of duty on any excisable goods and he would not be entitled to avail the CENVAT credit under Rule 3 or Rule 11 of CENVAT Credit Rules, 2004 - Whether a job worker entitled to take credit of duty in respect of duty paid inputs used by him in manufacture of goods on job work basis or not - Held that - Availment of CENVAT Credit of duties paid on such inputs in question was absolutely in order, and in accordance with the Scheme of CENVAT Credit Rules - The appellant was entitled to avail CENVAT Credit. Following STERLITE INDUSTRIES (I) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE 2004 (12) TMI 108 - CESTAT, MUMBAI - The Scheme of Rule 57C of the erstwhile Central Excise Rules had been similar to the Scheme of Rule 6 of CENVAT Credit Rules now in operation - Under Rule 57F of the erstwhile Rules, removal of duty paid inputs to a job worker for carrying out further operations and processes was permissible and the same scheme of allowing a job worker to produce or process goods using the inputs sent by the principal manufacturer was contained in the CENVAT Credit rules also - The appellants had received duty paid inputs directly and the same had been used in relation to manufacture of the goods on job work basis, but the inputs being duty paid inputs and the same having been received by the appellant directly and having been used in relation to manufacture of goods on job work basis, Rule 6(1) of the CENVAT Rules was not attracted - Since the appellant succeeded on merit, the question of imposition of penalty does not arise Decided in favour of Assessee.
Issues:
1. Availing CENVAT credit under Notification No. 8/2003-C.E. 2. Lapsing of CENVAT credit balance under Rule 11(2) of CENVAT Credit Rules, 2004. 3. Imposition of penalty under Rule 15 of CENVAT Credit Rules. 4. Interest liability under Section 11DD of Central Excise Act, 1944. 5. Interpretation of Notification No. 8/2003-C.E. regarding CENVAT credit utilization. 6. Applicability of CENVAT Credit Rules to job work transactions. 7. Legal entitlement of job worker to avail MODVAT Credit. Analysis: 1. The appellant, engaged in manufacturing and job work under relevant notifications, availed CENVAT credit on inputs. The Revenue contended that under Rule 11(2) of CENVAT Credit Rules, 2004, opting for exemption would result in lapsing of CENVAT credit balance, disallowing its use for duty payment on excisable goods. 2. The Revenue issued Show Cause Notices for recovery and penalty under Rule 14 of CENVAT Credit Rules, 2004, along with interest liability under Section 11DD. The adjudicating authority confirmed the recovery but dropped the interest liability due to non-utilization of CENVAT credit. 3. Both the assessee and Revenue appealed the Order-in-Original. The Revenue argued for interest payment on unutilized CENVAT credit. The Commissioner allowed Revenue's appeal and rejected the assessee's appeal challenging interest and penalty imposition. 4. The appellant's defense was based on the interpretation that goods manufactured on job work basis were not exempt under the relevant notification, thus allowing CENVAT credit utilization. Citing precedent cases, the appellant argued for the correctness of their actions. 5. The Tribunal analyzed Notification No. 8/2003-C.E. and relevant precedents, concluding that since the value-based exemption did not apply to job work goods, restrictions on CENVAT credit utilization were not applicable. The decision in Nebulae Health Care Ltd. case supported this interpretation. 6. Referring to the Larger Bench decision in Sterlite Industries Ltd. case, the Tribunal established that job workers were entitled to avail MODVAT Credit for inputs used in job work manufacturing. The Tribunal applied this interpretation to the current case, allowing the appellant to avail CENVAT Credit. 7. Considering the provisions of the notification and the legal entitlement of job workers to avail MODVAT Credit, the Tribunal ruled in favor of the appellant, allowing the appeal and providing consequential relief. This detailed analysis outlines the key issues, arguments presented, relevant legal interpretations, and the final decision of the Tribunal, ensuring a comprehensive understanding of the judgment.
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