Job-work clearances under Notification 214/86 are not exempted goods for Rule 6; demand and penalty were remanded.

Clearances from a job worker under Notification No. 214/86-C.E. are not to be treated as exempted or nil-rated goods for Rule 6 of the Cenvat Credit Rules, 2004, because the duty liability is shifted to the principal manufacturer. Rule 6 applies where a unit uses common inputs to manufacture both dutiable and exempted goods on which credit has been taken, and its application to the present job-work clearances was not established. Relying on prior Larger Bench precedent and the department's own challenge, the Tribunal remanded the matter to the Commissioner for fresh decision; the demand and penalty were not finally sustained.

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Issues: Whether clearances made by a job worker under Notification No. 214/86-C.E. could be treated as exempted or nil-rated goods for the purpose of Rule 6 of the Cenvat Credit Rules, 2004, and whether the demand of 10% of value and penalty could be sustained.

Analysis: The order records that goods cleared from the job worker's premises are not to be equated with exempted goods or goods cleared at nil rate, since duty liability is shifted to the principal manufacturer. It also notes that Rule 6 of the Cenvat Credit Rules, 2004 is directed to situations where a unit manufactures both dutiable and exempted goods using common inputs on which credit has been availed, and that the rule was not shown to govern job-work clearances in the present facts. In view of the Tribunal's earlier Larger Bench ruling and the department's own challenge to the impugned order, the matter required fresh consideration.

Conclusion: The demand and penalty were not finally sustained, and the matter was remanded to the Commissioner for fresh decision in the light of the precedent decisions and the department's own stand.

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