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TMI Blog2018 (7) TMI 1931X X X X Extracts X X X X X X X X Extracts X X X X ..... le 2(k) of the CCR, inputs include goods used in the manufacture of capital goods which are further used in the factory of the manufacturer. Therefore, NIPL was eligible to avail the disputed Cenvat credit. Liability of payment of duty on TGS on the manufacture of the said capital goods - Job-work - HELD THAT:- It is an admitted fact that NIPL, being the principal manufacturer in the instant case, had undertaken to discharge the duty liability harnessed on TGS by way of a declaration made before the jurisdictional Central Excise officer as per Notification No. 214/86-CE - Since, there is no allegation or finding to the effect that the principal manufacturer in the instant case had not complied with any condition of the said notification, the benefit of the Notification was available to them. Therefore, TGS was not liable to discharge duty on the goods manufactured by them - Since, the liability of payment of duty on NIPL is not the subject matter of the Show Cause Notice in the instant case, we refrain from making any observation to that extent. Penalty - HELD THAT:- Since the demands against NIPL and TGS are liable to be dropped, the penalty imposed on Shri R.K. Agrawal cannot sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cy stack (iv) In the aforementioned two Purchase Orders it was agreed that all raw materials, including fasteners, will be supplied by NIPL to TGS, which included steel plates, angles, channels, pipes and rods etc. and other components needed for the processing and fabrication of the equipments. (v) NIPL, by a letter dated November 13, 2012 requested the Commissioner of Central Excise, Jamshedpur, for permission to work under rule 4(5) of the Cenvat Credit Rules, 2002, read with the Notification No. 214/86-CE dated March 25, 1986 for the fabrication of the goods under the said Purchase Orders, who directed NIPL to contact the jurisdictional Divisional Office for the relevant permission. (vi) NIPL by a letter dated November 21, 2002 informed the jurisdictional Deputy Commissioner of Central Excise, Jamshedpur about the setting up of the said factory and gave the required declaration and undertaking under Notification No. 214/86-CE for sending goods after taking Modvat Credit thereon for job work to TGS whereafter they would be returned to NIPL and used in or in relation to manufacture of final product in the said factory. (vii) Thereafter NIPL sent various inputs to TGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide Notification No. 214/86 with respect to the goods used for manufacture of final products which are subsequently cleared on payment of duty from the premises of the principal manufacturer. In the instant case, TGS have manufactured Kiln and cooler on job work basis from the inputs supplied by NIPL and have cleared the same in CKD condition without payment of duty and have used the same for setting up of Sponge Iron Unit of NIPL. (iii) The fact that such manufactured goods are further subject to exemption under Notification No. 67/95 and do not suffer duty at any stage was well known to TGS; they have escaped from payment of central excise duty by misusing exemption notification no. 214/86. Furthermore, the simultaneous availment of benefits under exemption notification nos. 67/95 and 214/86 for a commodity manufactured and cleared is not authorised by any provision of the Act or Rules or backed by judicial pronouncements. (iv) The terms of contract between NIPL and TGS were on principal to principal basis and contrary to the finding of the adjudicating authority that the principal manufacturer is always liable to discharge central excise duty. Rule 4(6) of Cenvat Credit Ru ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b worker cannot be considered as manufacturer of kilns and coolers and hence there can be no demand of duty on TGS, as held in the case of Excel Corrugated Boxes (P) Ltd. Vs. Commissioner of Central Excise [2005 (182) ELT 485 (T) affirmed in CCE & Cus Vs Excel Corrugated Boxes (P) Ltd. [2009 (237) ELT 454 (Ker)]. (v) The contention that since the goods were not used in or in relation to manufacture of any final product by NIPL but was captively used as a part of the plant being set up, the benefit under Notification No. 214/86-CE was not available is contrary to the notification itself which does not exclude machines, machinery, plants, equipments etc. There being no dispute that kiln and coolers are intrinsic parts to this Sponge Iron plant set up by NIPL, which was used for manufacture of dutiable sponge iron by NIPL once the plant was set up, exemption under the said Notification was available. In this respect reliance was placed upon - (i) Flex Engineering Ltd Vs. CCE [2004 (178) ELT 853 (T)] (ii) Mech Form Vs. CCE [2014 (309) ELT 492 (T)] affirmed by Supreme Court in Commissioner Vs. Mech Form [2015 (320) ELT A 180 (SC)]. 4. Heard both sides and perused the appeal r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d capital goods, it is an admitted fact that NIPL, being the principal manufacturer in the instant case, had undertaken to discharge the duty liability harnessed on TGS by way of a declaration made before the jurisdictional Central Excise officer as per Notification No. 214/86-CE. The goods cleared by TGS after job work were dutiable goods and as per the decision of the Larger Bench of this Tribunal in the case of Thermax Babcock and Wilcox Ltd. v. CCE, Pune-I reported in 2017-TIOL-4390-CESTAT-MUM-LB, it is only by way of Notification No. 214/86-CE that the liability to pay duty is shifted from the job worker to the principal manufacturer. Since, there is no allegation or finding to the effect that the principal manufacturer in the instant case had not complied with any condition of the said notification, the benefit of the Notification was available to them. Therefore, TGS was not liable to discharge duty on the goods manufactured by them. Since, the liability of payment of duty on NIPL is not the subject matter of the Show Cause Notice in the instant case, we refrain from making any observation to that extent. 9. We find that since the demands against NIPL and TGS are liable to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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