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TMI Blog2014 (10) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... ject of Cenvat credit is to avoid cascading effect of duty. SEIITL only manufactured the chassis, which is only a part of a TV. It is not a finished product and is only an intermediary product. We also find that SEIITL supplied intermediary product to SEIL, which manufactured the TV and paid duty on it. Consequently, it was entitled to avail Cenvat Credit in order to prevent the cascading effect, if duty was levied. We are of the opinion that SEIITL, which was the job worker was entitled to duty paid on inputs and used in the manufacture of intermediary product. Consequently, for the reasons stated aforesaid, the appeal fails and is dismissed. - Decided against Revenue. - Central Excise Appeal No. 277 of 2006 - - - Dated:- 25-9-2014 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 07.05.2003. According to the department, since Cenvat Credit had wrongly been utilised by SEIITL and there was suppression of facts and declaration with regard to duty, a notice dated 26.03.2004 was issued to SEIL for contravention of Cenvat Credit Rules, 2001 (hereinafter referred to as the Rules). SEIL submitted its reply and thereafter the Commissioner Central Excise, Noida passed an order in original dated 28.12.2004 disallowing the Cenvat Credit amounting to ₹ 74,40,730.00 and also imposed penalty. Being aggrieved, SEIL preferred an appeal before the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, who by an order dated 21.02.2006 allowed the appeal holding that the SEIL was eligible for availment of Cenvat Credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... EIITL was only manufacturing an intermediary product whereas Rule 6(4) was applicable to capital goods. Having heard the learned counsel for the parties, we find that the Excise Department has objected to the availment of Cenvat Credit of ₹ 74,40,730.00 on capital goods that was received by SEIITL from SEIL by applying Rule 6(4) of the Rules and contending that the capital goods have been used exclusively in the manufacture of exempted final products. Rule 2(b) of the Rules defines capital goods to mean goods which are used in the factory of the manufacturer of the final product. Rule 3 provides that a manufacturer or producer of final products shall be allowed to take credit paid on any inputs or capital goods received in the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject: Cenvat credit on Capital goods used in intermediate products exempt from duty under the new set of rules I am directed to refer to the subject cited above and to say that in the absence of a corresponding provision to rule 57R(2) of Central Excise Rules, 1944 in new rules effective from 1-7-2001, a doubt has arisen whether Cenvat credit shall be available on the capital goods used in manufacturing of intermediate goods exempt from payment of duty e.g. capital goods used in the preparatory stages of cotton in a textile mill which are exempt from duty but are produced in the course of manufacturing of finished products chargeable t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of C.Ex., Banglore Vs. Bharath Fritz Werner Ltd., 2007 (218) E.L.T. 177 (Kar.), the Court held that the assessee was entitled to Cenvat credit by using the captively consumed machines, which are used for manufacture of goods on job work basis and in respect of such final products wherein the principal manufacturer makes payment of duty but the job worker, namely, the assessee who undertakes the job work takes credit using the captively consumed machines for doing such job work. In Escorts Ltd. Vs. Commissioner of Central Excise, Delhi, 2004 (171) E.L.T. 145 (S.C.), the appellants were manufacturer of tractors. They availed Modvat credit in respect of duties paid on inputs used in the manufacture of parts. Those parts were th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s pari materia to Rule 6(4) of the Cenvat Credit Rules 2001. We find that SEIITL only manufactured the chassis, which is only a part of a TV. It is not a finished product and is only an intermediary product. We also find that SEIITL supplied intermediary product to SEIL, which manufactured the TV and paid duty on it. Consequently, it was entitled to avail Cenvat Credit in order to prevent the cascading effect, if duty was levied. We are of the opinion that SEIITL, which was the job worker was entitled to duty paid on inputs and used in the manufacture of intermediary product. Consequently, for the reasons stated aforesaid, the appeal fails and is dismissed. The questions of law are answered in favour of the assessee and against the depar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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