2018 (1) TMI 16 - AT - Central Excise

Captive consumption - job-work - goods goods cleared to their job workers without payment of duty - N/N. 67/95-CE dated 16.3.1995 - Held that - it is admitted fact that these dies have been manufactured by the appellant in their factory and sent to the job worker for further manufacturing intermediate goods - Admittedly, the dies have not been used captively in the factory of the appellant. Therefore, the benefit of the N/N. 67/95-CE is available to the appellant. CENVAT credit - Revenue neutrality - Rule 4 (5) (b) of CCR - Held that - if the appellant had paid duty on dies, the appellant was entitled to take Cenvat credit thereof immediately. In that circumstance, we find that is Revenue neutrality situation - it is case of Revenue neutrality as whatever duty they had paid on the dies, immediately they were entitled to the take Cenvat credit of the same. If that being the situation, in that circumstance, as per Rule 4 (5) (b) of the Rules, Cenvat credit has been taken by the appellant on these dies, the appellant is not required to reverse the credit as the same are cleared to the job workers for further manufacture of the goods. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Demand of duty on captive manufactured goods cleared to job workers without payment of duty.

Analysis:
The appellant, engaged in manufacturing automobile parts, sent dies to job workers without paying duty, claiming exemption under Notification No.67/95-CE. A show cause notice was issued for duty demand, interest, penalty, and redemption fine. The appellant argued for revenue neutrality under Rule 4(5)(b) of Cenvat Credit Rules, citing relevant case laws.

The Revenue contended that the exemption was not applicable as the goods were not captively consumed, and Rule 4(5)(b) did not apply due to no duty payment or credit taken by the appellant. The Tribunal found that the dies were not captively used, denying the exemption. However, considering revenue neutrality, the Tribunal referred to precedents like Hartech Plastics and SMT Machine cases, emphasizing the availability of Cenvat credit if duty was paid.

The Tribunal cited Ultratech Cements case to support revenue neutrality, stating that demanding duty on intermediate products would be scriptory work without revenue benefit. Consequently, the Tribunal held that the duty demand was not sustainable due to revenue neutrality, allowing the appeal and setting aside the impugned order, including the redemption fine.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing revenue neutrality under Rule 4(5)(b) and setting aside the duty demand and redemption fine, granting consequential relief.