2017 (5) TMI 548 - AT - Central Excise

Tribunal Grants Relief in Cenvat Credit Appeal

M/s Jackson & Company Versus CCE, New Delhi

M/s Jackson & Company Versus CCE, New Delhi - TMI Issues:- Disallowance of Cenvat credit and penalty imposition by Commissioner (Appeals)- Interpretation of Notification No. 214/86-CE regarding duty payment responsibility- Validity of Cenvat credit claim based on duty paid by job worker- Application of CBEC Circular and Stay Order in similar casesAnalysis:The case involves an appeal by M/s Jackson & Co. against the disallowance of Cenvat credit amounting to Rs. 29,25,544/- and imposition of an equivalent penalty by the Commissioner (Appeals). The appellant sent goods for job work under Notification No. 214/86-CE to M/s Inditex India for paint work of canopy. The Revenue contended that no duty was leviable on the job worker, hence the duty paid by the job worker is not valid for Cenvat credit claim. The Tribunal heard arguments from both sides represented by respective counsels.The Tribunal analyzed Notification No. 214/86-CE, which states that the supplier sending goods for job work is responsible for discharging Central Excise duty liabilities on the finished products received from the job worker. It was noted that the paints and chemicals used by the job worker were duty paid, and the job worker paid Central Excise duty on the job work, despite the scheme not explicitly providing for it. Referring to CBEC Circular No. 766/82/2003-CX and a Stay Order in a similar case, the Tribunal emphasized that Cenvat credit should be allowed if the transaction is bona fide and there is no evasion or fraud.Considering the duty payment by the job worker and the responsibility of the appellant under Notification No. 214/86, the Tribunal found no issue in claiming Cenvat credit for the duty paid on the job work. Despite the peculiar circumstances where duty payment was initiated by Revenue audit and later a show cause notice was issued to deny Cenvat credit, the Tribunal concluded that the impugned order disallowing the credit and imposing a penalty should be set aside, allowing the appeal with consequential relief.In conclusion, the Tribunal's judgment revolved around the interpretation of the duty payment responsibility under Notification No. 214/86-CE, the validity of claiming Cenvat credit based on duty paid by the job worker, and the application of relevant circulars and previous orders in similar cases to support the appellant's claim for credit.