2017 (3) TMI 1096 - AT - Central Excise

CENVAT credit - job-work - whether cenvat credit is admissible in respect of inputs used by the job worker in the manufacture of job work goods under N/N. 214/86-C.E. dated 25.03.86 which is cleared without payment of duty back to the supplier of raw material? Held that - As per the said notification, the main condition is that on the job work goods the principal manufacturer is under legal obligation to discharge the excise duty. Therefore the goods manufactured by the job worker can not be treated as exempted goods, consequently cenvat credit on the inputs used in such job work goods can not be disallowed - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
Whether cenvat credit is admissible for inputs used by a job worker in manufacturing job work goods cleared without duty payment back to the raw material supplier.

Analysis:

1. Issue of Cenvat Credit Eligibility:
The main issue in the appeal was whether cenvat credit is permissible for inputs utilized by a job worker in producing job work goods under a specific notification. The Tribunal considered the legal obligation of the principal manufacturer to discharge excise duty on the job work goods. The Tribunal referenced various judgments, including a larger bench decision in the case of Sterlite Industries, to support the contention that goods manufactured by the job worker cannot be treated as exempted, thus entitling the assessee to claim cenvat credit on inputs used in such job work goods.

2. Judicial Precedents and Legal Interpretation:
The respondent's counsel cited several judgments to bolster their argument, including decisions from the Hon'ble High Courts and the Tribunal's own previous rulings. The Tribunal acknowledged the reliance on these judgments, emphasizing the consistent interpretation that when the principal manufacturer is legally obligated to pay excise duty on job work goods, cenvat credit on inputs used in such manufacturing processes should not be disallowed.

3. Decision and Rationale:
After careful consideration of both parties' submissions and the impugned order, the Tribunal found that the issue had been extensively deliberated in previous judgments, including the Sterlite case. The Tribunal reiterated the principle that if the final product, manufactured using inputs for which duty was paid, is cleared by the principal manufacturer with duty payment, then the cenvat credit should not be denied. Consequently, the Tribunal dismissed the revenue's appeal, upholding the impugned order and citing the precedent set by the Larger Bench of CESTAT in favor of the appellants.

4. Final Verdict and Dismissal of Appeal:
The Tribunal concluded that the impugned order was sound and aligned with the legal principles established in previous judgments. By following the ratio of the cited judgments and the decision of the Larger Bench of CESTAT, the Tribunal found the revenue's appeal unsustainable and dismissed it accordingly. The order was pronounced in court on 28/2/2017, finalizing the decision in favor of the assessee.

This detailed analysis of the judgment highlights the key legal issues, the application of relevant precedents, the rationale behind the decision, and the final outcome of the appeal.