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of <h1>Tribunal rules in favor of NIPL and TGS on Cenvat credit and duty liability</h1> <h3>Commissioner of Central Excise, Jamshedpur Versus M/s Tisco Growth Shop, M/s Nilachal Iron & Power Ltd And Shri R.K. Agarwal</h3> Commissioner of Central Excise, Jamshedpur Versus M/s Tisco Growth Shop, M/s Nilachal Iron & Power Ltd And Shri R.K. Agarwal - TMI Issues Involved:1. Whether Cenvat credit availed by NIPL on the inputs sent to TGS, which were used in the manufacture of final products, was available to NIPL.2. Whether TGS was liable to pay duty on the goods cleared by them to NIPL after job work.3. Whether the Department was correct in imposing penalty on Shri R.K. Agarwal.Detailed Analysis:Issue 1: Cenvat Credit Availment by NIPLOn examining the contract between NIPL and TGS, it was established that structural fabrication was carried out at the NIPL site, which amounted to 'manufacture' as per Section 2(f) and Section 3 of the Central Excise Act. The Commissioner found that the kiln and cooler did not attain the shape of final products at TGS's factory. The final product was obtained only at NIPL's premises. The Tribunal referred to the decision in CCE Vs. Surco Rubber Ltd. to conclude that TGS could not be held liable for duty as the goods were not fully manufactured at its premises.The Tribunal found that the kiln and cooler are capital goods used in the manufacture of sponge iron, and the inputs on which NIPL availed Cenvat credit were used in the manufacture of these capital goods. Rule 2(k) of the Cenvat Credit Rules (CCR) includes goods used in the manufacture of capital goods, which are further used in the factory of the manufacturer. Thus, NIPL was eligible to avail the disputed Cenvat credit.Issue 2: Duty Liability of TGSThe Tribunal noted that NIPL, as the principal manufacturer, had undertaken to discharge the duty liability harnessed on TGS by a declaration made under Notification No. 214/86-CE. The goods cleared by TGS after job work were dutiable, and as per the decision in Thermax Babcock and Wilcox Ltd. v. CCE, the liability to pay duty is shifted from the job worker to the principal manufacturer through Notification No. 214/86-CE. Since there was no allegation that NIPL had not complied with any condition of the said notification, TGS was not liable to discharge duty on the goods manufactured by them. The liability of payment of duty on NIPL was not the subject matter of the Show Cause Notice, so no observation was made on that aspect.Issue 3: Penalty on Shri R.K. AgarwalGiven that the demands against NIPL and TGS were dropped, the penalty imposed on Shri R.K. Agrawal could not sustain.Conclusion:The Tribunal found no infirmity with the impugned order of the Commissioner, upheld the same, and dismissed the appeals filed by the Revenue.
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