Custom, Excise & Service Tax Tribunal
M/S. Tapasya Engineering Workds Pvt. ... vs Commissioner Of Central Excise, Mumbai on 15 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/786/12-MUM, E/85055/13-MUM [Arising out of Orders-in- Appeal Nos. BC/361/MUM-III/2011-12 dated 29/2/2012 and BC/281/MUM-III/2012-13 dtd. 25/9/2012 passed by the Commissioner of Central Excise (Appeals) Mumbai-III] For approval and signature: Honble Mr Ramesh Nair, Member(Judicial) =======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
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M/s. Tapasya Engineering Workds Pvt. Ltd.
:
Appellants
VS
Commissioner of Central Excise, Mumbai
:
Respondent
Appearance
Miss. Padmavati Patil, Advocate for the Appellants
Shri. Rakesh Goyal, Addl. Commissioner(A.R.) for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 15/1/2015
Date of decision 15/1/2015
ORDER NO.
Per : Ramesh Nair
Two appeals are directed against Orders-in-appeal Nos. BC/281/MUM-III/2012-13 dtd. 25/9/2012 and BC/361/MUM-III/2011-12 dated 29/2/2012 both passed by the Commissioner of Central Excise (Appeals) Mumbai-III, wherein the Ld. Commissioner(Appeals) sustained the orders in original Nos. 57/RG/2011-12 dated 4/10/2011 and 231/11-12/DC/W-I/M-III dated 13/6/2012 respectively and appeals of the appellants were rejected. The fact of the case is that the appellant M/s. Tapasya Engineering Works Pvt. Ltd, Unit II are engaged in the job work of their own another unit i.e. M/s. Tapasya Engineering Works Pvt. Ltd Unit I. The appellants are also registered as Central Excise assessee and filing the return. They availed the Cenvat credit of service tax of various services like Rent charges, Security charges and Telephone charges and Inspection charges. The Revenue issued the show cause notice, wherein Cenvat credit proposed to be denied on the ground that the appellant is a job worker carrying out job under Notification No. 214/86-CE dated 25/3/1986 hence they are not the manufacturer therefore not eligible for Cenvat Credit. The adjudicating authority on adjudication denied the Cenvat credit of Rs. 70,839/- and Rs. 8,39,311/- respectively and also imposed equal amount of penalty and demanded interest. Aggrieved by the said adjudication order the appellant filed appeal before the Commissioner (Appeals), who sustained the orders in original and rejected the appeal of the appellant therefore the appellants are before me.
2. Ms. Padmavati Patil, Ld Counsel for the appellant submits that the Commissioner(Appeals) has wrongly held that the appellants are not manufacturer and they are only job worker and denied the Cenvat credit for this reason. She submits that in terms of Section 2(f) of Central Excise Act, 1944 and Rule 2 (n) of Cenvat Credit Rules. 2004, it is clear that even the job worker who engaged in the processing of articles is an activity of manufacture and job worker is the manufacturer. Therefore, it is wrong to say that job worker is not manufacturer. She placed Reliance on various judgments as cited below:-
(a) [2014(34) S.T.R. 345(Tri-Ahmd.)] JBF Industries Vs. CC.EX.& S.T., Vapi
(b) [2014(36)S.T.R. 637(Tri- Mumbai)] Western India forgoing P. Ltd. Vs, CC., EX., Pune
(c) [2011-TIOL-1010-CESTAT-MUM] Aurangabad Auto Engg Pvt. Ltd. Vs. CC. EX., Aurangabad
(d) [2005(183) E.L.T. 353(Tri. LB)] Sterlite Industries (I) Ltd. Vs. CC., Ex. Pune Upheld by the Honble Bombay High Court [2009(244) E.L.T. A89(Bom)
(e) [2010(19) S.T.R. 585(Tri. Ahmd.) Polycab Industries Vs. Commissioner of C. EX. , Daman
(f) [A/497-498/2010/WZB/AHD/2010 dated 13/5/2010] M/s. Lakoonaa Reactions. Vs. CCE Ahemdabad She submits that the issue involved, in the present case is squarely covered by all above cited judgments and accordingly the appellants are entitle for the Cenvat Credit on input services.
3. On the other hand, Shri. Rakesh Goyal, Ld Addl. Commissioner(A.R.) appearing on behalf of the Revenue reiterates the impugned order. He further submits that in the present case the appellants are job worker and principal manufacturer is the only manufacturer. Accordingly the appellant being non manufacturer are not entitled for Cenvat Credit. Therefore the Ld. Commissioner (Appeals) has rightly disallowed the Cenvat credit to the appellant.
4. I have carefully considered the submissions made by both the sides and perused the record.
5. The issue whether job worker is manufacturer or otherwise can be ascertained from the definition provided under Section 2F of Central Excise Act, 1944 and Rule 2(n) of Cenvat Credit Rule 2004 which are reproduced below:
2(f) of Central Excise Act, 1944 SECTION 2. Definitions. In this Act, unless there is anything repugnant in the subject or context, -
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(f) manufacture includes any process, -
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which is specified in relation to any goods in the Section or Chapter notes of the First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or which, in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer;
and the word manufacturer shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account;
Rule 2. Definitions. - In these rules, unless the context otherwise requires,-
(a) "capital goods" means:-
(A) the following goods, namely:-
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(n) "job work" means processing or working upon of raw material or semi-finished goods supplied to the job worker, so as to complete a part or whole of the process resulting in the manufacture or finishing of an article or any operation which is essential for aforesaid process and the expression "job worker" shall be construed accordingly;
From the above Section 2 (f) (i) even activity of completion of manufacture product is considered as manufacturer. Job workers admittedly engaged in the processing of component/parts which activity undoubtedly a manufacturing activity, accordingly the job worker is also a manufacturer. From Rule 2(n) also, it is clear that the manufacture takes place in the course of job work also therefore in the present case the job worker activity is manufacturing activity and the job work is also constitutes as manufacture. In view of this legal position the job worker being manufacturer, Cenvat credit was wrongly denied merely on the contention that the job worker is not the manufacturer. Ratio of Judgments relied upon by the Ld. Counsel for the appellants are squarely applicable in the present case. In the case of JBF Industries Vs. CC.EX.& S.T., Vapi (supra) Division Bench of this Tribunal as held under:
6.1?The issue involved in the present proceedings is whether the Cenvat credit of input services taken by the appellant and used by them in the manufacture of job-worked goods (exempt under Nofn. No. 214/86-C.E.) is admissible to the appellant or not in view of the provisions contained in Rule 6(1) of the Cenvat Credit Rules, 2004. The demand has been confirmed against the appellant on the grounds that Service Tax credit proportionate to the services used in the manufacture of exempted goods under Notification No. 214/86-C.E., dated 25-3-1986, is not admissible. From the case laws relied upon by the appellant, it is observed that the issue is no more res integra and has been decided by the Larger Bench in the case of Sterlite Industries (I) Limited v. CCE, Pune (supra) by holding that credit availed by the job worker cannot be denied where inputs were used in the manufacture of goods which were cleared without payment of duty under Notification No. 217/86-C.E. In this judgment the Larger Bench approved the law laid down by CESTAT in the case of Jindal Polymers [2001 (43) RLT 680 (Tri.-Del.) = 2001 (135) E.L.T. 657 (Tri.-Del.)]. We find that in the matter of Jindal Polymers (supra), a division of Jindal Polyester Ltd., were engaged in the manufacture of polyester/polymer chips falling under Chapter 39 on job work basis for Jindal Polyester Ltd. They received main inputs viz. DMT and MEG from Jindal Polyester Ltd. for the purpose of processing/job work in terms of Notification 214/86-C.E., dated 25-3-1986, on which no credit was taken by them. They also procured certain other inputs viz. furnace oil, ammonia, titanium oxide, etc., for use in processing of inputs received from M/s. Jindal Polyester and availed credit on the above inputs. The processed, goods i.e. polyester/polymer chips were cleared without payment of duty under the said Notification M/s. Jindal Polyester Ltd. The Department was of the view that credit was not admissible since Rule 57C of the Central Excise Rules provided that Modvat credit of duty paid on inputs used in the manufacture of final products cleared at nil rate of duty is not admissible if the provisions of Rule 57CC ibid are not followed. Following the ratio of Bajaj Tempo Case [1994 (69) E.L.T. 122], the Tribunal held in this case that the appellants were entitled to Modvat credit of duty paid on inputs procured on their own account & used in the manufacture of job-worked goods exempted under Notification Number 214/86-C.E. This decision of the Tribunal has been affirmed by the Larger Bench decision in the matter of Sterlite Industries (I) Limited v. CCE, Pune [2005 (68) RLT 25 (CESTAT-LB) = 2005 (183) E.L.T. 353 (Tribunal-LB)]. Departmental appeal filed against this order of the Larger Bench has been rejected by the Honble Bombay High Court as reported in 2009 (244) E.L.T. (A89). Further, in the cases of Polycab Industries v. CCE, reported as 2010 (19) S.T.R. 585 (Tri.-Ahmd.) and Laakoonaa Reactions v. CCE, Ahmedabad-I (Final Order No. A/497-498/WBZ/AHD/2010, dated 13-5-2010), the Tribunal has held that Cenvat credit of input services was admissible to the job worker clearing goods to principal manufacturer under Notification Number 214/86-C.E. In view of the above, we hold that the provisions of Rule 6(1) of the Cenvat Credit Rules, 2004 cannot be invoked for denying Cenvat credit of input services used by the appellant factory for manufacture of job-worked goods under Notf. No. 214/86-C.E. Though the Larger Bench judgment in the case of Sterlite Industries (I) Ltd. was delivered with respect to Rule 57C of the Central Excise Rules, 1944, but the ratio of the same has been held to be applicable to the Service Tax credit availed by the job worker under Notification No. 214/86-C.E. as per the decisions of this Bench in the case of Polycab Industries v. CCE, Daman (supra), and Laakoonaa Reactions v. CCE, Ahmedabad-I (supra).
6.3?The Revenue has also argued that the production or processing of raw materials, which amounted to manufacture in terms of Section 2(f) of the Central Excise Act, 1944, was an exempted or non-taxable service during the material period as per Rule 2(e) of the Cenvat Credit Rules, 2004, and hence Cenvat Credit of input services was not available to the appellant for rendering non-taxable or exempted output service viz. production or processing of raw materials amounting to manufacture. In this context we find that the job work activity of the appellant is amounting to manufacture and is not one of providing any service. The appellant factory cannot be both a manufacturer and a service provider at the same time in relation to a particular activity. It is settled proposition in Central Excise matters that a job worker is a manufacturer and hence the appellant factory cannot be treated as a service provider rendering exempted/non-taxable service for the manufacturing activity. Therefore, there is no force in the Revenues contention that the appellant had rendered exempted/non-taxable service to its sister concern located at Athola.
7.?In view of the above observations, appeal filed by the appellant is allowed by setting aside the Order of the adjudicating authority.
In the Western India forging P. Ltd. Vs, CC., EX., Pune (supra) coordinate Bench of this Tribunal held as under :
7.?In this case the appellant is a job worker and the final product which they supplied to the principal manufacturer has suffered duty. Therefore, the issue is to be examined in the scenario whether the final product has suffered duty or not. As per Notification 214/86 the job worker can receive the goods from the principal manufacturer without payment of duty and also procure the inputs on payment of duty and can avail the credit. He is also entitled to clear the goods without payment of duty to the principal manufacturer who cleared the final goods on payment of duty. The same treatment has been given by the Notification 8/2005 (ibid). In these circumstances, as it is an admitted fact that the final products which have been processed by the appellant have suffered duty, therefore, appellants are entitled to take the credit of the input service.
8.?With these observations, I set aside the impugned order and allow the appeal with consequential relief.
In the Abramabad Auto Engg Pvt. Ltd. Vs. CC. EX., Aurangabad(supra) this Tribunal held as under:-
6. On careful examination of the facts and submission made by the learned Advocate, I find that in this case it is not dispute that the goods manufactured by the appellants on job work basis have been cleared without payment of duty to their principal manufacturer, who further used these goods in manufacturing of final product which were cleared on payment of duty. Therefore the decision of Larger Bench of this Tribunal in the case of Sterlite Industries (I) Ltd. (supra) is squarely applicable to the facts of this case. In view of the decision of the Larger Bench of this Tribunal (supra), the appellants are entitled to take the CENVAT credit as availed by them. Therefore, I set aside the impugned order and allow the appeal.
In the case of Polycab Industries Vs. Commissioner of C. EX. , Daman (supra) it was held as under:
[Order]. - The dispute in the present appeal is to the credit of service tax paid by them on the various services availed, which stand utilized by them in the manufacture of goods on job work basis. After hearing both sides, I find that the issue is no more res integra and stand settled by Larger Bench decision of the Tribunal in case of Sterlite Industries (I) Ltd. - 2005 (183) E.L.T. 353 (Tri. - LB). This decision stand followed in appellants own case being Order No. A/302/WZB/AHD/2009, dated 22-1-99. In addition, in the judgment in the case of Laakoonaa Reactions being Order No. A/497-498/WZB/AHD/2010, dated 13-5-10, the Tribunal has held that the duty paid on input services is admissible to the job worker clearing the goods to principal manufacturer under Notification No. 214/86-C.E.
2.?In view of the above, I set aside the impugned order and allow the appeals with consequential relief to the appellants.
In the case of M/s. Lakoonaa Reactions. Vs. CCE Ahemdabad (Supra) this Tribunal held as under:
2. The appellant had cited the decision of the Larger Bench of the Tribunal in the case of M/s. Sterlite Industries Ltd. as reported in 2005(183) ELT 353(Tri-LB), in support of their contention that they are eligible to take credit of duty in respect inputs received directly and used by the job workers. When the matter came up for hearing on 1/4/10, it was noticed that the Commissioner(Appeals) in his order, has observed that the decision of the Larger Bench of the Tribunal in the case of M/s Sterlite Industries was over-ruled by the Judgment of Honble Supreme Court in the case of M/s, Tata Motors Ltd. The matter was adjourned to enable the learned SDR to get the said decision of Honble Supreme Court. However, when the matter was taken up for hearing today, the learned SDR fairly admitted that the decision in respect of M/s. Tata Motors Ltd. cited by the Commissioner(Appeals) was by the Tribunal as reported in 2009(242) ELT 353 and not of Honble Supreme Court. Further, it was also noticed that the said decision was a stay order and this was overruled by Honble High Court of Mumbai as reported in 2009(244) ELT 337(Mum).
3. In view of the above discussion, it is quite clear that the issue is covered by the decision of Larger Bench of the Tribunal in the case of M/s Sterlite Industries Ltd. but the Commissioner(appeals) considered the decision of the Tribunal as decision of Honble Supreme Court and did not follow the decision of Tribunal in case of M/s. Sterlite Industries ltd. Since the facts are same and issue is covered by the decision of the Tribunal in the case of M/s. Sterlite industries Ltd., the appeal filed the appellant is required to be allowed and I do so.
All the above judgments are based on the Larger Bench judgment of this Tribunal in the case of M/s Sterlite Industries Ltd(supra) wherein the Larger Bench after considering various judgment passed following order:
We have heard Shri Vimlesh Kumar, SDR appearing for the revenue and Shri Vipin Kumar Jain, CA appearing for the appellant. It is seen that the Tribunal in the case of Jindal Polymers [2001 (135) E.L.T. 657 (Tribunal) = 2001 (43) RLT 680 (Tri. - Delhi), has followed the earlier order of the Tribunal in the case of Bajaj Tempo and has held that a job worker, who has received the goods from the manufacturer under Rule 57F, is entitled to take credit of duty in respect of the other inputs received directly and used by him in the manufacture of the said goods on job work basis. The main reason for arriving at this conclusion was of two fold. First that Rule 57F is a self-contained provision and the goods processed under the said rule were being returned to the principal manufacturer who was paying duty on the same. Secondly, it weighed with the bench that the provision of Rule 57C would not get attracted inasmuch as the removal of the goods was neither under the exempted notification nor the goods were chargeable to nil rate of duty. For arriving at the above conclusion reliance was placed upon the earlier decision of the Tribunal of Bajaj Tempo. In the case of Bajaj Tempo, provision of Rule 57F as also provision of Rule 57C were considered in detail along with the consideration of Notification No. 217/86. It was observed that under Modvat scheme, credit of duty paid on notified 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 workers factory and receipt of the same in the manufacturers 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.
2.?The revenue is denying the Modvat credit to the present job worker on the grounds that the inputs were used in the manufacture of the goods which were cleared without payment of duty. Pausing here for a second, let us take a situation where the basic inputs is sent by the principal 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 would be additional paper work. It is basically to avoid such a situation the procedure under Rule 57F(3) has been enacted. As rightly observed by the earlier decisions the mechanical application of Rule 57C which destroys the basic benefit intended to be extended to the assessee should be avoided. If the interpretation adopted by the revenue is upheld, the benefit otherwise intended to be given will get frustrated apart from leading to discriminatory situation, where the manufacturer has himself processed the inputs and in the other case were he is sending it to the job worker.
3.?We are also in agreement with the appellants 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 of duty. As such, to attract the provisions of Rule 57C, two situations in respect of the final product should be satisfied. Either the final product should be exempted, which situation can arise only when there is an exemption notification issued under Section 5A of the Central Excise Act or the final product is chargeable to nil rate of duty. Expression chargeable to nil rate of duty or exempted from whole of duty was considered by the Tribunal in the case of Orissa Synthetics Ltd. v. Collector of Central Ex. [1995 (77) E.L.T. 350 (Tri.)] and after taking note of the Ministries clarifications issued vide Circular No. 10/75/CX. 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 cleared the goods on payment of duty and manufacturer could have claimed credit of the same. It is only under the special procedure laid down in terms of the Rule 57F(3) that the duty does not get paid at the job workers end at the time of clearance of the goods, but ultimately gets paid at the manufacturers end. In these circumstances, we are in agreement with the decision rendered in the case of Bajaj Tempo and Jindal Polymers.
3.?Apart from the above two decisions, we also note that identical view was taken in the case of Shakti Insulated Wires Ltd. v. CCE & C, Mumbai-V [2002 (149) E.L.T. 668 (Tri.) = 2002 (51) RLT 115 (CEGAT-Mum)] & also in the case of CCEx, Jaipur v. Noorani Textiles Mills [2000 (122) E.L.T. 744 (Tribunal)].
4.?In only case of Escorts Ltd. v. CC Ex, Delhi [2003 (160) E.L.T. 623 (Tri-Del.)] while interpreting Rule 57C of the Central Excise Rules, the Tribunal rejected the appellants claim of Modvat credit of duty paid on the inputs used in the manufacture 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 final product.
9.?In cases of manufacturers like the Appellants the final product is the tractor. The intermediate product would be parts which are manufactured for being used in the tractor. In such a case the parts would not be the final product. Thus Rule 57C would have no application. The mere fact that the parts are cleared from one factory of the Appellants to another factory of the Appellants would not disentitle the Appellant from claiming benefit of Notification No. 217/86-C.E., dated 2nd April, 1986. As stated above, the Notification itself clarifies that the inputs can be used within the factory of production or in any other factory of the same manufacturer. By applying the ratio of the above decision, it becomes clear that Modvat credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilisation in the manufacture of final product, which are cleared on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Inasmuch as, the matter stands decided by the Honourable Supreme Court, we would hold in favour of assessee.
5.?As regards the decision in the case of Alpha Lavan laying down that the Modvat credit could be claimed in such a situation, we find the earlier decision of the Bajaj Auto was not followed. However, in view of the facts that the ratio of Bajaj Auto decision stands approved by the Supreme Court decision in the case of Escort Ltd. referred supra, we are of the view that the Alpha Lavan is no longer 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.
In view of the above judgments it is observed that much water was flown on the issue and it has been settled that the job worker, working under Notification No. 214/86-CE is entitled to take Cenvat Credit in respect of input or input services received by him.
I also find that apart from the issued settled in the above judgments the Rule 3(1) is also relevant on the question involved in the present case. The said Rule 3(1) is reproduced below:
Rule 3. CENVAT credit. ---(1) A manufacturer or producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as the CENVAT credit) of
(i) the duty of excise specified in the First Schedule to the Excise Tariff Act, leviable under the Excise Act;
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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 3,sub-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 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), No. 214/86- Central Excise, dated the 25th March, 1986, published in the Gazette of India vide number G.S.R. 547 (E), dated the 25th March, 1986, and received by the manufacturer for use in, or in relation to, the manufacture of final product, on or after the 10th day of September, 2004.
From reading of the above provisions also it is explicitly clear that even in case of manufacture of goods on job work basis in terms of Notification No. 214/86-CE credit of Cenvat credit of service tax is admissible.
It is observed that the job worker subsequently returns the intermediate goods to the principal manufacturer and the said manufacturer is duty bound to clear the final product on payment of excise duty therefore right from initial raw-material upto the manufacture of final product at whatever stage input or input services is used to Cenvat credit on all such input or input services is allowed.
5.1 In view settled legal position, the Cenvat credit in respect of input services availed by the appellant during the course of job work manufacture in terms of Notification No. 214/86 -CE is correctly admissible to them. Therefore both the lower authorities have gravely erred in disallowing the credit despite the issue is settled in various judgments cited above.
In view of my above discussions, the impugned orders are set aside and the appeals are allowed with consequential relief, if any, in accordance with law.
(Operative part of the order pronounced in the Court) Ramesh Nair Member (Judicial) sk 21