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TMI Blog2020 (1) TMI 801X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant: Shri Manish Saharan, Advocate Present for the Respondent: Shri H.C. Saini, Authorised Representative ORDER BIJAY KUMAR: This appeal seeks to assail the order dated 10.04.2018 passed by the Learned Commissioner (Appeal), Customs, Central Goods and Service Tax and Central Excise, Indore, by which order dated 31.01.2017 of 1st Adjudicating Authority has been sustained. Being aggrieved, the appellant is in appeal before this Tribunal. 2. M/s Caparo Engineering Limited Pithampur (hereinafter referred is as the appellant) was an entity at Delhi, Large Taxpayer Unit (LTU) vide membership No. LTU/DEL/035 and Central Excise Registration No. AABCC7862NXM004. The appellant engaged in the manufacture of part and accessories of motor vehicles. The appellant is also undertaking job work under Central Excise Act, 1944 ( Act for short) and Rules made there under. 3. It was observed by the department, that the appellant was availing exemption of Notification No. 214/1986-CE dated 25.03.1986 for job work on blank supplied by M/s. VE Commercial Vehicles, (hereinafter referred to M/s VE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... led to avail the cenvat credit of duty paid on paints, which were used in the job work activities. The reliance was places on the decision of Hon ble CESTAT, Mumbai, in case of M/s Sterlite Industries India Limited vs. Commissioner of Central Excise, Pune reported in 2015 (183) ELT 353(Tri.-LB) and also on judgement of Hon ble Supreme Court in case of M/s Escort Ltd. Vs. Commissioner (2004) 177 ELT 145 (AC). The Hon ble Larger Branch of this Tribunal in case of Sterlite Industry held that the job worker, who has received the goods from the manufacturer under Rule 57F of erstwhile Central Excise Rules, entitled to Cenvat credit of duty paid in respect of input received directly and used by him in the manufacture of said goods on a job work basis. Similar views were expressed in case of Vishal Pipes Ltd., Vs. Commissioner of Central Excise Noida 2011 (263) E.L.T. 81 (Tri.) Delhi, Commissioner of Central Excise, Ludhiana Vs. Jainsons Wool Coombers Ltd. 2012 (26) S.T.R. 488 and Hon ble Cestat, Mumbai, and Final Order No. A/201/11/SMB/C-IV dated 01.06.2011 in the case of Aurangabad Auto Engineering Pvt. Ltd., Vs. Commissioner of Central Excise, Aurangabad. 6. In lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs is to be given for payment of duty on the notified final products, if such inputs are used in or in relation to the manufacture of the final products and such inputs are not hit by exemption to Rule 57A. Notification No. 217/86 [which laid down the procedure for sending the basic raw material to the job worker s factory and receipt of the same in the manufacturer s factory after processing for further utilisation in the manufacture of the final products on which duty is paid by the manufacturer. The notification is mainly intended to avert payment of duty at each intermediate stage and take credit of such duty at each subsequent stage, starting from the basic material, turning out components and finally ending with ultimate final product. Hence, the scope of Rule 57C in such a situation like this has to be constituted in the context of the Modvat scheme and not to destroy the basic concept. 3. We are also in agreement with the appellant s contention that Rule 57C debars taking of credit in respect of the inputs used in the manufacture of the final product, if final product is exempted from the whole of duty of excise leviable thereon or chargeable to nil rate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture of the parts, which were cleared without payment of duty to, appellant's other unit under Chapter X procedure and utilised in the manufacture of tractor which were cleared on payment of duty by observing that since no duty was paid on the part at the time of clearance, Rule 57C will apply and no Modvat credit would be admissible. However, the said decision was subsequently reversed by the Supreme Court as reported in Escort v. C.C.Ex. [2004 (171) E.L.T. 145 (S.C.)]. For appreciation, we 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been cleared by job worker working under 214/86 as exempted goods is not justified. It is not in dispute that the supplier of input in this case has taken credit on input like zinc, steel pipes and tubes. If the final products cleared by the job worker are exempted, the question of granting credit to principal manufacturer does not arise. 8. The authorities below while holding that the appellants have not fulfilled the conditions of Notification No. 214/86, have not denied the benefit of the said notification as they have not demanded duty on the entire value of final products cleared by job worker including the value of inputs supplied by the principal manufacturer. Apparently, the finding that they have not fulfilled the conditions of Notification 214/86 and the course of action adopted are found to contrary to each other. 9. In the given facts of the present case, the goods cleared by the appellants under 214/86 cannot be treated as exempted goods and, therefore, the question of applying Rule 6 of the Cenvat Credit Rules does not arise. Therefore, there is no basis for demanding duty by disallowing credit attributable to materials used by ..... 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