2017 (12) TMI 607 - AT - Central Excise

CENVAT credit - removal of moulds to other manufacturers (other than the job workers) for production of goods without reversing the credit availed on such moulds - Rule 3 (5) of CCR, 2004 - Held that - The Hon ble High Court in the case of CCE, Pondicherry Vs. Whirlpool of India Ltd. 2014 (9) TMI 717 - MADRAS HIGH COURT had analysed the issue whether it is necessary for the purpose of sub-rule 8 of Rule 57 S of CER, 1944, that raw materials should be supplied by the assesse for the purpose of construing the person as a job worker. The issue has been answered in favour of the assesse. The facts in the present case as to whether the person to whom the appellant has sent the moulds is a job worker or not requires verification - appeal allowed by way of remand.

Summary

Issues:
1. Availing Cenvat credit without reversing credit on moulds sent to other manufacturers.
2. Interpretation of Rule 4 (5) (b) of Cenvat Credit Rules 2004.
3. Eligibility of credit on moulds sent to manufacturers other than job workers.
4. Retrospective effect of the amendment dated 27.02.2010.
5. Requirement of raw material supply to consider a person as a job worker.

Analysis:
1. The appellants availed Cenvat credit without reversing the credit on moulds sent to manufacturers other than job workers, leading to a demand of irregularly availed credit. The original authority and Commissioner (Appeals) upheld the demand, resulting in the appeal.

2. The appellant's counsel argued based on Rule 4 (5) (b) of Cenvat Credit Rules, emphasizing the eligibility of credit on moulds sent to job workers for production. The argument highlighted the amendment effective from 27.02.2010, expanding credit eligibility to manufacturers other than job workers. The counsel referenced a jurisdictional High Court decision supporting the job worker classification even without raw material supply.

3. The respondent reiterated that the amendment lacked retrospective effect, making the pre-amendment Rule 4 (5) (b) applicable. Emphasizing the necessity of raw material supply to classify a person as a job worker, the respondent contended that the appellants failed to prove the manufacturer's job worker status.

4. The Tribunal acknowledged the appellant's new contention regarding the manufacturer's job worker status, raised for the first time during the appeal. Referring to the jurisdictional High Court decision on a similar provision, the Tribunal deemed verification necessary to determine the person's job worker status, remanding the matter to the adjudicating authority for reconsideration.

5. Consequently, the impugned order was set aside, leaving all issues open for reconsideration by the adjudicating authority. The appeal was allowed by way of remand, ensuring a thorough verification of the job worker status of the manufacturer to whom the moulds were sent.