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TMI Blog2023 (3) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) and is also availing Modvat/CENVAT credit of duty paid on inputs and capital goods under Rule 3 of CENVAT Credit Rules, 2002/2004. During the course of audit of the respondent's records, for the period from September, 2003 to March, 2005, the staff of Central Excise Audit observed that the respondent had taken CENVAT credit in respect of the imported inputs, namely, stator Assy, spacer, rectifier assy, regulator assy, rotor, bearings etc., used in the manufacture of Alternator in terms of provisions of Rule 4 of CENVAT Credit Rules, 2002/2004. It was further observed that respondent has imported the goods under the cover of proper bill of entries and after getting custom clearance, directly sent under Notification No.214/86-CF dated 23.3.1986 as amended to M/s Lucas TVS Limited (hereinafter referred as 'Job Worker'), for further processing, and, job-work challans to this effect were issued by the respondent after taking CENVAT Credit of CVD paid thereon. After completion of job work at the job worker's premises, the processed goods i.e. semi furnished alternator, were sent by the job worker to the respondent under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of duty paid by the job worker on the inputs used by him in or in relation to the manufacture of the intermediate product. In this case the duty has been paid by the job worker on the product manufactured by him and no duty has been paid by the job worker on any input used in the manufacture thereof. Furthermore the product manufactured by the job worker in this case is not the intermediate product but the input for the party. The imported goods were not the inputs of the party. Under rule 3 the credit of duty paid by the job worker is allowable in respect of those inputs which are added by the job worker out of his own produce on payment of duty. That is not the case here. I observe that the law laid down by the Apex Court in the case of M/s Ujagar Prints case in respect of goods manufactured on job basis deals with valuation aspect of the goods so manufactured and laid down the guideline for payment of excise duty based on raw material, cost of production plus job workers profit whereas the issue involved in the instant case is whether the CENVAT could be availed on the same inputs/processed inputs twice i.e. once at the input stage and again on the intermediate stage (espe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... il and heard both the learned counsels at length. 7. The learned counsel for the appellant has submitted that the respondent has availed CENVAT credit twice, as it took credit on duty paid on imported raw material, used by the job worker in the manufacture/processing of goods, and, also on duty paid by the job worker on the goods manufactured by them. He vehemently argued that the imported raw material was not the input used by the respondent, rather in fact, the goods received from the job worker, are the inputs used by the respondent, and therefore, the duty paid thereon, as shown in the invoice/challan issued by the job worker, is only eligible to be taken credit by the respondent. Furthermore, while placing reliance upon Rule 3(1) of the CENVAT credit, he submitted that the Rule (supra) allows credit of duty paid on the inputs used in relation to the manufacture of final products. The inputs, as used in relation to manufacture of final products, are the goods supplied by the job worker and not the imported raw materials. 8. Per contra, the learned counsel for the respondent has submitted that there is no infirmity in the order passed by the learned Tribunal, and consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iff Act: Provided that a provider of taxable service shall not be eligible to take credit of such additional duty; (viii) the additional duty of excise, leviable under section 157 of the Finance Act, 2003 (32 of 2003); (ix) the service tax leviable under section 66 of the Finance Act; (x) the Education Cess on taxable services leviable under section 91 read with section 95 of the Finance (No. 2) Act, 2004 (23 of 2004); and [(xi) the additional duty of excise leviable under [section 85 of Finance Act, 2005 (18 of 2005),]] 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 service received by the manufacturer of final product or by the provider of output services on or after the 10th day of September, 2004, including the said duties, or tax, or cess paid on any input or input service, as the case may be, used in the manufacture of intermediate products, by a job-worker availing the benefit of exemption specified in the notification of the Government of India in the Ministry of Finance (Department of Revenue), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is not mandatory. Thus, the respondent had correctly taken the credit of the duty paid by the job worker and they are also entitled to CENVAT credit of CVD paid on such inputs. It is a case of double payment of duty on same inputs. The payment of duty twice is not disputed, thus, it would be unfair and against the scheme of CENVAT to deny credit of said duty. This aspect has already been considered by the High Court of Gujarat in case titled "Commr. of C. Ex., Ahmedabad-I V/s Rohan Dyes & Intermediated Ltd.". The relevant paragraphs of the judgment (supra) are extracted hereunder:- 11. In such case, it was contended on behalf of the appellant that the entire transaction between the TELCO and the appellant was covered by Rule 57F(2)(b) of the Central Excise Rules, 1944. According to the said appellant under those Rules, the assessee is the manufacturer of final product and in that case, excavators. The manufacturer of the final product, according to the appellant, was permitted to remove the inputs to a place outside the factory for the purpose of manufacture of intermediate products so that they return to the factory for further use in the manufacture of final product. The appell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, namely, wagons." 13. If we apply the aforesaid principle to the facts of the present case, there is no dispute that according to the modvat scheme, it is the modvat of such final product which would have to include the cost of the inputs and in respect of which Modvat credit could be taken at the time of clearance of the final product and thus, in the facts of the present case, the Tribunal rightly rejected the contention of the Revenue that the respondents should have reversed the Cenvat credit taken before sending the goods to the job worker since the job worker had not followed the procedure of job work. It may not be out of place to mention here that that what was earlier provision contained in Rule 57F(2)(b) is exactly the present provision of Rule 4(5A) of the Cenvat Credit Rules, 2004. 14. We do not find any substance in the contention of Mr. Ravani that the job workers cannot prefer to pay excise duty in spite of having exemption notification bearing No. 214/86 exempting the job workers from paying duty in view of the mandatory provision of Section 5A(1A) of the Act. Similarly, we are also not impressed by the submission of Mr. Ravani that it was a case of sale an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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