2014 (3) TMI 308 - AT - Central Excise

Tribunal Allows Clearance of Final Products Using Zinc Hydroxide as Input

TRANSPEK SIOLX INDUSTRY LTD. Versus COMMISSIONER OF C. EX., VADODARA-I

TRANSPEK SIOLX INDUSTRY LTD. Versus COMMISSIONER OF C. EX., VADODARA-I - 2013 (297) E.L.T. 295 (Tri. - Ahmd.) Issues:Permission for clearance of final products from job worker's premises under Rule 4(6) of the Cenvat Credit Rules, 2002.Analysis:1. The appeal challenged the rejection of the application seeking permission for clearance of final products from the premises of a job worker under Rule 4(6) of the Cenvat Credit Rules, 2002. The adjudicating authority had denied permission for sending zinc hydroxide to the job worker for conversion into zinc oxide based on the argument that zinc hydroxide is a final product and not a processed input, hence Rule 4(6) would not apply.2. The appellate tribunal noted that the order passed by the adjudicating authority appeared to be in an administrative capacity. However, since the order was labeled as 'Order-in-Original,' the tribunal proceeded to review the appeal under the provisions of Section 35(b) of the Central Excise Act, 1944.3. The appellant had historically been granted permission to send zinc hydroxide to the job worker for conversion into zinc oxide and clearance from the job worker's premises. However, for the year 2008, the Commissioner found that Rule 4(6) did not apply to zinc hydroxide as it was considered a final product. This decision was challenged and remanded back to the Commissioner for further consideration.4. In the impugned order of 2012, the Commissioner reiterated that zinc hydroxide was a marketable product and not a partially processed input, thereby denying permission for clearance of final products from the job worker's premises. The tribunal disagreed with this assessment, stating that any item used for manufacturing a final product on which duty is discharged can be considered an intermediate or partially processed input. Since zinc hydroxide was being utilized to manufacture zinc oxide by the job worker, it qualified as an input under Rule 4(6).5. The tribunal found the department's rejection of permission erroneous, especially considering the appellant's compliance with previous permissions and the absence of evidence of misutilization. Consequently, the tribunal set aside the impugned order and allowed the appeal, permitting the clearance of finished goods manufactured at the job worker's premises under Rule 4(6) of the Cenvat Credit Rules, 2004.6. In conclusion, the tribunal's decision was based on the interpretation of Rule 4(6) and the classification of zinc hydroxide as an input for the manufacturing process, overturning the Commissioner's denial of permission for clearance of final products from the job worker's premises.This detailed analysis covers the issues involved in the legal judgment, providing a comprehensive understanding of the tribunal's decision regarding the permission for clearance of final products under Rule 4(6) of the Cenvat Credit Rules, 2002.