2015 (10) TMI 1782 - AT - Central Excise

Denial of CENVAT Credit - Job work - inputs and capital goods used in the manufacture of final products cleared without payment of duty, after job work - Held that - issue involved in this case is no longer res integra as the same is decided in favour of the assessee by Larger Bench of this tribunal in the case of Sterlite Industries (I) Ltd. (2004 (12) TMI 108 - CESTAT, MUMBAI), wherein it was held that inputs used in the manufacture of final products cleared without payment of duty, after job work, cannot be considered as used in exempted goods and job workers are entitled to input credit. Therefore, in the light of the Larger Bench s decision of the Tribunal in the case of Sterlite Industries Ltd. (supra), I hold that the appellant is eligible to avail CENVAT Credit credit on the inputs used in the manufacture of final products cleared without payment of duty. Accordingly, the impugned orders are set aside - Decided in favour of assessee.

Summary

Issues:
1. Availment of CENVAT Credit on inputs used in job work
2. Demand of duty, interest, and penalty under Cenvat Credit Rules, 2004
3. Appeal against orders of Commissioner of Central Excise (Appeals)
4. Interpretation of inputs used in the manufacture of final products cleared without payment of duty

Analysis:
1. The appellant, M/s Tata Motors Ltd., availed CENVAT Credit of duty paid on raw materials and capital goods under Rule 3(f) of Cenvat Credit Rules, 2004. They painted body shells received from M/s FIAT India Automobiles Pvt. Ltd. on job work basis under Rule 4(5)(a) of the same rules. The painted body shells were returned to the principal manufacturer without payment of duty. A show-cause notice was issued for non-reversal of credit of inputs used in the job work, leading to a demand of duty, interest, and penalty under Rule 15 of the Cenvat Credit Rules, 2004.

2. The appeals were filed before the Commissioner (Appeals) challenging the orders of the adjudicating authority. The Commissioner upheld the original orders, resulting in the appellant being aggrieved and preferring appeals before the Tribunal.

3. The Tribunal considered the issue of whether inputs used in the manufacture of final products cleared without payment of duty after job work can be considered as used in exempted goods. The appellant relied on the decision of a Larger Bench in the case of Sterlite Industries (I) Ltd. vs. Commissioner of Central Excise, Pune, which held that job workers are entitled to input credit in such cases. The Tribunal, based on the Larger Bench's decision, allowed the appeals, setting aside the impugned orders and granting relief to the appellant.

4. The Tribunal's decision clarified that inputs used in the manufacture of final products cleared without payment of duty after job work do not fall under exempted goods, affirming the entitlement of job workers to avail CENVAT Credit on such inputs. The judgment emphasized the importance of precedent set by the Larger Bench in similar cases, ensuring consistency in the interpretation and application of the Cenvat Credit Rules, 2004.