Tribunal Rules in Favor of Appellant on Cenvat Credit Issue

The Tribunal ruled in favor of the appellant, emphasizing revenue neutrality under Rule 4(5)(b) of the Cenvat Credit Rules. The duty demand on goods cleared to job workers without payment of duty was deemed unsustainable, setting aside the duty demand, interest, penalty, and redemption fine. The Tribunal highlighted the availability of Cenvat credit if duty was paid, referencing precedents like Hartech Plastics and SMT Machine cases. Citing the Ultratech Cements case, the Tribunal concluded that demanding duty on intermediate products without revenue benefit was unwarranted, ultimately granting consequential relief to the appellant.

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Issues:
Demand of duty on captive manufactured goods cleared to job workers without payment of duty.

Analysis:
The appellant, engaged in manufacturing automobile parts, sent dies to job workers without paying duty, claiming exemption under Notification No.67/95-CE. A show cause notice was issued for duty demand, interest, penalty, and redemption fine. The appellant argued for revenue neutrality under Rule 4(5)(b) of Cenvat Credit Rules, citing relevant case laws.

The Revenue contended that the exemption was not applicable as the goods were not captively consumed, and Rule 4(5)(b) did not apply due to no duty payment or credit taken by the appellant. The Tribunal found that the dies were not captively used, denying the exemption. However, considering revenue neutrality, the Tribunal referred to precedents like Hartech Plastics and SMT Machine cases, emphasizing the availability of Cenvat credit if duty was paid.

The Tribunal cited Ultratech Cements case to support revenue neutrality, stating that demanding duty on intermediate products would be scriptory work without revenue benefit. Consequently, the Tribunal held that the duty demand was not sustainable due to revenue neutrality, allowing the appeal and setting aside the impugned order, including the redemption fine.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing revenue neutrality under Rule 4(5)(b) and setting aside the duty demand and redemption fine, granting consequential relief.

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