2017 (2) TMI 367 - AT - Central Excise

Cenvat Credit - Job Work - Diethyl Phthalate - demand on the ground that this goods is final product, the same cannot be removed without payment of duty under Rule 4(5) (a) of Cenvat Credit Rules, 2002 - Held that - whether it is initial input or intermediate goods but if it is used in the manufacture of final product at both the stages the goods will be treated as input therefore removal of Diethyl Phthalate is correctly covered under the provisions of Rule 4(5) (a) of Cenvat Credit Rules, 2002 - the duty cannot be demanded on the said goods which was removed only for job work purpose and subsequently returned back to the appellants factory. There is no dispute that the final product in which said Diethyl Phthalate was used has been cleared by the appellants on payment of appropriate excise duty - demand not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of duty on clearance of intermediate goods Diethyl Phthalate under Rule 4(5)(a) of Cenvat Credit Rules, 2002.

Analysis:

Issue 1: Demand of duty on clearance of intermediate goods Diethyl Phthalate under Rule 4(5)(a) of Cenvat Credit Rules, 2002.

The adjudicating authority confirmed the duty demand on Diethyl Phthalate, considering it as a finished product not eligible for clearance under Rule 4(5)(a) of the Cenvat Credit Rules, 2002. The appellants cleared Diethyl Phthalate on job work basis, using it as an intermediate good in the manufacture of their final product, which was then cleared after paying duty. The Commissioner (Appeals) upheld the duty demand, leading the appellants to appeal. The appellant's representative argued that although Diethyl Phthalate might be a final product, for them, it served as an input or intermediate good, justifying its removal under Rule 4(5)(a) of the Cenvat Credit Rules, 2002. The representative cited relevant judgments to support this argument.

The Assistant Commissioner representing the Revenue supported the findings of the impugned order. Upon reviewing the submissions, the Tribunal noted that the duty was demanded on Diethyl Phthalate as a final product, contending that it couldn't be removed without duty payment under Rule 4(5)(a) of the Cenvat Credit Rules, 2002. However, the Tribunal disagreed with this view, emphasizing that if a product is used in the manufacture of a final product at any stage, it should be treated as an input. Therefore, the removal of Diethyl Phthalate for job work purposes fell within the provisions of Rule 4(5)(a) of the Cenvat Credit Rules, 2002. As the final product using Diethyl Phthalate had already been cleared with appropriate duty payment, the demand confirmed by the lower authority was deemed unsustainable. The Tribunal found support in the judgments cited by the appellant's counsel, ultimately setting aside the impugned order and allowing the appeals.

In conclusion, the Tribunal ruled in favor of the appellants, holding that the duty demand on Diethyl Phthalate for job work purposes was not justified under Rule 4(5)(a) of the Cenvat Credit Rules, 2002, especially considering the nature of its use in the manufacture of the final product.