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2019 (2) TMI 852

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..... goods is admissible. Credit allowed - appeal allowed - decided in favor of appellant. - Appeal No. E/12027/2018 -SM - A/10252/2019 - Dated:- 8-2-2019 - Mr. Raju, Member (Technical) Shri Naimesh K. Oza, Advocate for the Appellant Shri S.N. Gohil, Superintendent (AR) for the Respondent ORDER Per: Raju This appeal has been filed by M/s. Shree Organo Chemicals Ahmedabad Private Limited against the demand for reversal of amount under Rule 6 of Cenvat Credit Rules in respect of job work activities conducted by them for principal manufacturer. 2. Ld. Counsel pointed out that they are engaged in the manufacture of Dyes and Chemicals and they also undertake job work activities for others and availed Notificat .....

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..... which reads as under: Rule 3, Cenvat Credit - . .. [Provided that the CENVAT credit shall be allowed to be taken of the amount equal to central excise duty paid on the capital goods at the time of debonding of the unit in terms of the para 8 of notification No. 22/2003-Central Excise, published in the Gazette of India, part II, Section (i), vide number G.S.R.265(E), dated, the 31st March, 2003] paid on (i) any input or capital goods received in the factory of manufacture of final product or premises of the provider of output service on or after the 10th day of September, 2004; and (ii) any input .....

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..... pal manufacturer after debiting the Modvat credit taken by him. The job worker takes the credit of the same his factory, utilises other inputs procured directly by him after taking the Modvat credit on the same and clear the processed goods to the principal manufacturer on payment of duty and the principal manufacturer takes the credit of the same in his factory and utilises such credit for payment of duty on his final products at the time of clearance. In such a situation, there can be no objection or dispute by the revenue as regards the admissibility of the credit on the inputs received directly by the job worker and utilised in his factory. The only effect of the above procedure adopted by the principal manufacturer and the job worker w .....

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..... X. 6, it was held that clearance under goods under provision of 191BB for export without payment of duty would not get covered by the above expression. Reference was made to the advice received from the Ministry of Law dealt in the paragraph of 9 in the said decision. It was opined in the said letter of the Law Ministry that the term exempted has a definite connotation. The same as attributed to the notification issued by the Central Government. Similarly, the chargeable to nil rate of duty would refer to the tariff rate being nil and the goods cleared in terms of provision of Rule 199BB would not be covered by the said expression inasmuch as the same are not chargeable to nil rate. In the present case, we find the job worker could have c .....

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..... reproduce paragraphs 8 9 of the said decision. 8. It is to be seen that the whole purpose of the Notification and the Rules is to streamlines the process of payment of duty and to prevent the cascading effect if duty is levied both on the inputs and the finished goods. Rule 57D(2), which has been extracted hereinabove, shows that in the manufacture of a final product an intermediate product may also come into existence. Thus in cases where intermediate product may also come into existence. Thus in cases where intermediate product comes into existence, even though no duty has been chargeable to Nil rate of duty, credit would still be allowed so long as duty is paid on the final product. 9. In cases of manufacturers like the Ap .....

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..... good law. 6. In view of the foregoing, we answer the reference in favour of the assessee. The papers may be placed before the original Bench for passing the appropriate orders. 6. In view of the 3rd Proviso to Rule 3(1) of Cenvat Credit Rules, 2004 and the Larger Bench judgment in the case of Sterlite Industries (supra), the issue is no more res-integra, accordingly, the impugned orders setting aside the demand are legal and correct which do not need any interference. We, therefore, upheld the impugned order and dismiss the Revenue s appeals. 5. Ld. AR has sought to rely on the decision in the case of Hema Engineering Industries Limited vs. CCE ST, New Delhi 2017 (5) GSTL 43 (Tri. Del.). In the said case the exemptio .....

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