Customs, Excise and Gold Tribunal - Mumbai
Trico Process Pvt. Ltd. vs Commissioner Of Central Excise on 11 May, 2005
Equivalent citations: 2005(189)ELT126(TRI-MUMBAI)
ORDER S.S. Sekhon, Member (T)
1. The issue involved in this case is whether under the CENVAT rules, the dispatch of inputs and process undertaken by the job worker on and resulting in the emergence of Laminated fabrics which are not covered by Notification 214/86 would result in duty demands to be made on the job worker as manufacturer of Laminated fabrics.
2. (a) The issue is well covered by the decision of this Tribunal in the case of M. Tex and D.K. Processor, 2001 (136) E.L.T. 73 & CCE v. Noorani Textile Mills, 2000 (122) E.L.T. 744 (Tri.) as in both decisions it has been held & a view taken on dutiability on fabrics when fabrics are returned to the principal manufacturer from a job worker, is the plea made by the ld. Advocate for the appellant.
(b) The ld. DR however contends that these decisions were arrived under the erstwhile Rule 57F of the Modvat Scheme and the Cenvat rules do not have specifically the provisions of Rule 57F(4)(i), (ii), (iii) & (iv) in Rule 4(5)(a) of Cenvat Credit Rules, therefore the liability on the Job worker for duty has been correctly raised and he reiterated the findings of CCE (A).
(c) After considering the scheme of Cenvat Credit Rules and on finding that the rules permit the removal of inputs for processing etc to a job worker do not prohibit such removals if the process amounts to manufacture. The prohibition is only that the inputs after processing are returned back in the stipulated period and if not returned duty credit taken on such inputs is to be recovered. If duty liability on processed inputs resulting in manufacture is cast on a job worker, then the principal manufacturer can receive back such job works and claim them to be duty paid and therefore pay no further duty and yet not be liable to reverse the credit. The duty paid by the job worker may also not be the duty liability on the principal manufacturer with SSI and other rate being available only to a job worker. There is therefore a danger of appropriate duty on such manufacture escaping the Tax Net along with the benefit of credit enjoyment by principal manufacturer. Besides Revenue interests, the concept of 57F movement of inputs, were meant, now CENVAT rule movements is to retain the supplier of inputs as a manufacturer of such inputs out sourced out of his factory. Such an onus cannot be cast on the job worker. We would therefore set aside the duty demand on the job worker, especially where the laminated fabrics have been received back by the input supplier; if the fabrics have not been received back, the principal manufacturer is required to reverse the credit and the job worker will be liable to duty on the laminated fabrics on his own liability. For the fabrics received back by the principal manufacturer the liability to duty will be on him with benefit of credit on inputs.
(d) The order is therefore set aside and remitted back to the original authority to re-determine only demands if any in above terms, following the ratio of the decision relied upon by the ld. Advocate.
3. Appeal allowed in above terms.
(Pronounced in Court)