2013 (8) TMI 388 - AT - Central Excise

Tribunal upholds decision on copper anode as intermediate product for CENVAT Credit

The appeal filed by Revenue was rejected, and the cross-objection by the respondent was also rejected. The appellate tribunal upheld the Commissioner ... Removal of goods under Rule 4(6) of the Cenvat Credit Rules, 2004 - Sale of goods from the premises of Job worker - permission denied - Respondent manufactures copper anode, copper cathode etc. at their Tuticorin factory - They sought permission from the Deputy Commissioner of Central Excise, Tuticorin Division for removal of copper anode to their units at Silvassa , Chinchpada and Pipara under Rule 4 (6) of Cenvat Credit Rules, 2004 for converting it to cathodes or copper wire – Held that:- Anode is both final product as well as intermediate product at their factory at Tuticorin . It is final product when it is cleared on payment of duty. It is intermediate product when it is further used in the manufacture of cathode or wire rods. Once the goods are recognized to be intermediate product there is no reason to deny the benefit Rule 4 (6) of Cenvat Credit Rules, 2004. That is what was advised to the respondent by CBEC. That is what is decided by Tribunal in very many decisions given in the context of erstwhile rule 57 F( 4) which provision was replaced by Rule 4 (6) in the new Rules – Reliance is placed upon the decision in the case of Eveready Industries Ltd. Vs. CCE - 2004 (8) TMI 302 - CESTAT, BANGALORE ] and Tega India Ltd Vs. CCE – [ 1999 (6) TMI 109 - CEGAT, CALCUTTA].- Decided in favor of Assessee. Issues Involved:1. Whether copper anode is a semi-processed input or a final product.2. Whether the same unit of a manufacturer can be considered as a job worker.3. Applicability of Rule 4(6) of the CENVAT Credit Rules, 2004 to the removal of copper anode.4. Discretionary power of the executive authority in granting permission under Rule 4(6).5. Validity of the Commissioner (Appeal)'s order and the grounds for cross-objection by the respondent.Detailed Analysis:1. Whether copper anode is a semi-processed input or a final product:The Deputy Commissioner of Central Excise, Tuticorin Division, refused permission for the removal of copper anode, arguing that it is a final product and not a semi-processed input. However, the Commissioner (Appeal) allowed the request, reasoning that copper anode should be considered a semi-processed input in the manufacture of copper cathode and continuous copper wire rods. The appellate tribunal agreed with the Commissioner (Appeal), stating that copper anode is both a final product when sold and an intermediate product when used for further manufacturing at the Tuticorin factory. This dual nature qualifies it for movement under Rule 4(6).2. Whether the same unit of a manufacturer can be considered as a job worker:The Deputy Commissioner argued that M/s. Sterlite Industries (I) Ltd., Silvassa, being the respondent's own unit, cannot be considered a job worker. The Commissioner (Appeal) countered this by referencing the Board's letter No. 12/91-Cx. 8 dated 28.2.1991, which allows the same unit to be considered as a job worker. The appellate tribunal upheld this view, finding no legal basis to exclude another factory of the same manufacturer from the definition of a job worker.3. Applicability of Rule 4(6) of the CENVAT Credit Rules, 2004 to the removal of copper anode:The Revenue's counsel argued that Rule 4(6) does not apply to dutiable final products like copper anode, as it is a marketable commodity and not an intermediate product. The appellate tribunal disagreed, emphasizing that copper anode is an intermediate product in the manufacturing process at the Tuticorin factory. The tribunal referenced previous decisions under Rule 57 F (4), which had similar provisions to Rule 4(6), to support this interpretation.4. Discretionary power of the executive authority in granting permission under Rule 4(6):The Revenue's counsel asserted that the discretion to permit or deny removal under Rule 4(6) should not be interfered with by higher appellate authorities. The appellate tribunal rejected this argument, stating that such discretion must be exercised judiciously and within the framework of the law. The tribunal cited cases where judicial scrutiny of executive discretion was deemed necessary to prevent arbitrary abuse of power.5. Validity of the Commissioner (Appeal)'s order and the grounds for cross-objection by the respondent:The respondent's cross-objection contested the Commissioner (Appeal)'s directive to the lower authority to grant permission rather than granting it directly. The appellate tribunal found this to be a matter of semantics and upheld the Commissioner (Appeal)'s order, emphasizing that the facility should be granted as directed. The tribunal also dismissed the respondent's objection to para 19 of the Commissioner (Appeal)'s order, which allowed for the review of permission each financial year, affirming that such reviews must be conducted judiciously.Conclusion:The appeal filed by Revenue was rejected, and the cross-objection by the respondent was also rejected. The appellate tribunal upheld the Commissioner (Appeal)'s decision, affirming that copper anode qualifies as an intermediate product eligible for removal under Rule 4(6) of the CENVAT Credit Rules, 2004, and that the same unit of a manufacturer can be considered a job worker. The tribunal emphasized the need for judicious exercise of discretion by executive authorities in such matters.