2014 (3) TMI 308 - AT - Central Excise

Cenvat Credit - Job Work - Application seeking removal of goods from the premises of Job Worker s premises on payment of duty was rejected - Rule 4(6) of the Cenvat Credit Rules, 2002 - conversion of zinc hydroxide into zinc oxide - Held that - such an action on the part of the department seems to be erroneous inasmuch as if the assessee is being granted permission from 2003 to 2008 and nothing found against the assessee as to mis-utilisation of such permission, they are also no findings as to the fact, that accounting of the goods cleared from the assessee s factory were in accordance with law and the final products cleared from the job worker s premise being correct - rejection of such permission seems to be contrary. Any item/goods in which is consumed for manufacturing of further final product, on which the duty liability is discharged, can also be considered as an intermediate product or partially processed input - no reason for not permitting the appellant to clear the finished goods manufactured at the job worker s premises under the provisions of Rule 4(6) of the Cenvat Credit Rules, 2004 which was granted to the appellant from the year 2003 to 2008 - Decided in favour of assessee.

Issues:
Permission for clearance of final products from job worker's premises under Rule 4(6) of the Cenvat Credit Rules, 2002.

Analysis:

1. The appeal challenged the rejection of the application seeking permission for clearance of final products from the premises of a job worker under Rule 4(6) of the Cenvat Credit Rules, 2002. The adjudicating authority had denied permission for sending zinc hydroxide to the job worker for conversion into zinc oxide based on the argument that zinc hydroxide is a final product and not a processed input, hence Rule 4(6) would not apply.

2. The appellate tribunal noted that the order passed by the adjudicating authority appeared to be in an administrative capacity. However, since the order was labeled as "Order-in-Original," the tribunal proceeded to review the appeal under the provisions of Section 35(b) of the Central Excise Act, 1944.

3. The appellant had historically been granted permission to send zinc hydroxide to the job worker for conversion into zinc oxide and clearance from the job worker's premises. However, for the year 2008, the Commissioner found that Rule 4(6) did not apply to zinc hydroxide as it was considered a final product. This decision was challenged and remanded back to the Commissioner for further consideration.

4. In the impugned order of 2012, the Commissioner reiterated that zinc hydroxide was a marketable product and not a partially processed input, thereby denying permission for clearance of final products from the job worker's premises. The tribunal disagreed with this assessment, stating that any item used for manufacturing a final product on which duty is discharged can be considered an intermediate or partially processed input. Since zinc hydroxide was being utilized to manufacture zinc oxide by the job worker, it qualified as an input under Rule 4(6).

5. The tribunal found the department's rejection of permission erroneous, especially considering the appellant's compliance with previous permissions and the absence of evidence of misutilization. Consequently, the tribunal set aside the impugned order and allowed the appeal, permitting the clearance of finished goods manufactured at the job worker's premises under Rule 4(6) of the Cenvat Credit Rules, 2004.

6. In conclusion, the tribunal's decision was based on the interpretation of Rule 4(6) and the classification of zinc hydroxide as an input for the manufacturing process, overturning the Commissioner's denial of permission for clearance of final products from the job worker's premises.

This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the tribunal's decision regarding the permission for clearance of final products under Rule 4(6) of the Cenvat Credit Rules, 2002.

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