Custom, Excise & Service Tax Tribunal
Commissioners Of Central Excise vs M/S Sarabhai Chemicals on 1 September, 2015
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Zonal Bench, Ahmedabad -ooOoo- Appeal No. : E/1269/2007 [ Arising out of OIO-04/DEMAND/COMMR-I/07 dtd 25/7/2007 Passed by Commissioners of Central Excise, Customs and Service Tax-VADODARA-I ] Commissioners of Central Excise, Customs and Service Tax-VADODARA-I - Appellant(s) Vs M/s Sarabhai Chemicals - Respondent (s)
Represented by :
For Assessee : Shri Daval Shah, Advocate For Revenue : Shri J Nagori, Authorised Representative For approval and signature :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) 1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether their Lordships wish to see the fair copy of the Order?
Seen 4 Whether Order is to be circulated to the Departmental authorities?
Yes CORAM :
Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical) Date of Hearing / Decision : 1/9/2015 ORDER No. A/11372 / 2015 dtd 1/9/2015 Per : Mr.P.K. Das, Revenue filed this appeal against the Order of the Commissioner of Central Excise and Customs, Vadodara-I, where the proceeding initiated in respect of the Show Cause Notice No. V.Ch.30(4)22/demand/96 dtd 30th Sept. 1996 was dropped.
2. After hearing both the sides and on perusal of the records, we find that the respondent was engaged in the manufacture of Chemicals. They supplied the material to the job worker under the provisions of Rule 57F(3) of the erstwhile Central Excise Rule 1944. The job worker, after processing the material returned to the respondent on payment of duty under the cover of invoice. The respondent availed Modvat Credit on the basis of the invoice issued by the job worker. The job worker had not availed benefit of exemption under Notification No 214/86-CE dtd 25.3.1986. By the impugned Show Cause Notice, it was proposed to deny the Modvat Credit on intermediate goods supplied by the job worker, during the period from March 1993 to July 1996.
3. We find that the Adjudicating authority passed the order following the decision of the Tribunal in the case of Bright Steel Mac Fabrics Vs CCE, Ahmedabad 1994(69)ELT.276 (Tri.) where it has been held that the job worker cannot be compelled to follow the option under Notification No. 214/86 CE dtd 25.3.1986 and it is for the job worker to return the processed goods on payment of duty. The said decision was upheld by the Honble Supreme Court as reported in 1997(94)ELT.A145(SC). We have also noticed that the Tribunal in a recent decision in the case of M/s Thermax Ltd Vs CCE., Vadodara by Final Order No A/11639/2014 dtd 17.9.2014 allowed the appeal on the identical issue. In that case, the Tribunal followed the earlier decision in the case of M/s Bharat Heavy Electricals Ltd Vs CCE&ST Meerut 1 2014(3)TMI.203-CESTAT, New Delhi. The relevant portion of the decision in the case of M/s Thermax Ltd (supra) is reproduced below :
6.?The appellant, had been receiving the duty paid inputs and had availed the Cenvat credit in respect of the same. These Cenvat credit availed inputs were, thereafter, sent to their job workers under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 without reversal of the credit for being processed into intermediate products. In this regard Rule 4(5)(a) is reproduced as under for appreciation of object of the grant of the Cenvat credit :-
(5)(a)?the Cenvat credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job-worker for further processing, testing, repair, re-conditioning Tor for the manufacture of intermediate goods necessary for the manufacture of final products or any other purpose, and it is established from the records, challans or memos or any other document produced by the manufacturer or provider of output service taking the Cenvat credit that the goods are received back in the factory within one hundred and eight days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eight days, the manufacturer or provider of output service shall pay an amount equivalent to the Cenvat credit attributable to the inputs and he can take the Cenvat credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service.
7.?Thus on perusal of the above Rule, it is clear that a manufacturer who has availed Cenvat credit in respect of inputs, can send those inputs to his job worker for further processing, testing, repair, reconditioning, etc. or for manufacture of intermediate goods necessary for the manufacture of final products or for any other purpose, provided the processed inputs or intermediate products are returned back within a period of 180 days. There is no condition that for availing the facility of this Rule, the job worker should avail full duty exemption under Notification No. 214/86-C.E. There is no dispute that intermediate products made out of the inputs supplied by the Appellant were received back from the job workers within the stipulated period. The only point of dispute is as to whether the Appellant would be eligible for Cenvat credit of the duty paid by the job workers on the intermediate products which had been paid on the value equal to the cost of the free supply inputs excluding excise duty (the credit of which had been taken by the Appellant) plus job charges plus value of any other inputs of their own used by the said job workers for manufacture of the intermediate products. The Department seeks to deny the Cenvat credit of the duty on the intermediate product paid by the job workers on the ground that on the same inputs, Cenvat credit cannot be availed twice - first at the time of receipt the inputs by the Appellant in their factory from the input manufacturers and second time in respect of duty paid on intermediates goods made out of input supplied by Appellant upon receiving the same from the job workers. Logically, the ground on which the Cenvat credit is sought to be denied is totally incorrect. There is no condition in Rule 4(5)(a) of the Cenvat Credit Rules, 2004 that job worker should necessarily avail of full duty Exemption under Notification No. 214/86-C.E. This exemption being a conditional exemption, is not required to be compulsorily availed by job workers. If the job worker decides to pay the duty on the intermediate products manufactured by him on job-work basis for the principal manufacturer, in terms of the judgment of the Apex Court in case of Ujagar Prints v. Union of India, reported in 1989 (39) E.L.T. 493 (S.C.), they would be required to pay duty on the cost of input plus job charges including the cost of their own inputs used in manufacture. This is what the job workers have done in the present case. Moreover when the inputs, in question, have suffered twice, first in the hand of input manufacturers from whom the Appellant had procured the inputs and second time in the hand of job workers who at the time of clearance of intermediate products made out of the inputs paid duty on value which included the cost of the inputs, the credit of the duty paid on the intermediate product cannot be denied when such intermediate were made out of those inputs, even if the Appellant had earlier taken the Cenvat credit in respect of inputs while receiving the same. In any case, the intermediate products made out of inputs are different from inputs and just because the Appellant have availed Cenvat credit in respect of the inputs, the Cenvat credit of duty, if any paid on the intermediate products by the job workers, cannot be denied to the principal manufactures.
4. In view of the above decision, we do not find any reason to interfere the order of the Adjudicating Authority. Accordingly, the appeal filed by the Revenue is rejected.
(Dictated and pronounced in the Court)
(P.M. Saleem) (P.K. Das)
Member (Technical) Member (Judicial)
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