Appellant's Cenvat credit allowed for inputs sent to job worker under Rule 4(5)(a); Tribunal grants relief. (5)(a)

The appellant availed Cenvat credit for inputs sent to a job worker under Rule 4(5)(a) without reversing the credit. The dispute arose regarding the payment of duty by the job worker and its availability as CENVAT Credit to the principal manufacturer. The Member (Judicial) held that the duty paid by the job worker, even if not required, can be availed as credit by the principal manufacturer. The Tribunal supported this view, setting aside the impugned orders and allowing the appeals with consequential relief.

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Issues:
- Availment of Cenvat credit in respect of inputs sent to job worker under Rule 4(5)(a) of CCR,2004 without reversing the credit.
- Dispute regarding payment of duty by job worker and its availability as CENVAT Credit to the principal manufacturer.

Analysis:
1. The appellant availed Cenvat credit for inputs sent to job worker under Rule 4(5)(a) without reversing the credit. The department contended that since the job worker cleared the cenvatable input under Rule 4(5)(a), he was not supposed to pay duty but avail exemption under Notification No.214/86-CE. Thus, the duty paid by the job worker should not be available as CENVAT Credit to the appellant.

2. The appellant's counsel argued that regardless of the inputs sent under Rule 4(5)(a), as the job worker paid duty and the goods were used in the final product, Cenvat credit should be admissible. He cited various judgments supporting this view, including Thermax Ltd. vs. CCE, CCE vs. Kohinoor Printers Pvt. Ltd., and CCE vs. Sundaram Auto Components Ltd.

3. The revenue representative reiterated the findings in the impugned order, stating that the job worker should have availed exemption under Notification No. 214/86-CE, and since this was not done, the duty paid by the job worker cannot be allowed as Cenvat credit to the appellant.

4. The Member (Judicial) analyzed the submissions and records, noting that under Cenvat Credit Rules, 2004, an assessee is entitled to credit for inputs used in manufacturing the final product. The appellant rightly availed Cenvat credit for duty-paid inputs sent to the job worker under Rule 4(5)(a). As per the conditional Notification No. 214/86-CE, the job worker had the option to avail exemption or pay duty, and in this case, the job worker chose to pay duty. The duty paid by the job worker was related to the job work goods used in the final product, justifying the admissibility of Cenvat credit. The Member referred to previous tribunal orders supporting this view.

5. The Member further cited judgments such as CCE vs. Kohinoor Printers Pvt. Ltd., CCE vs. Sundaram Auto Components Ltd., and CCE & ST vs. Sarabhai Chemicals, where it was held that the duty paid by the job worker, even if not required, can be availed as credit by the principal manufacturer. The Tribunal consistently supported the view that duty payment by the job worker is available as Cenvat Credit to the principal manufacturer. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief.

This detailed analysis of the judgment highlights the key issues, arguments presented by both sides, legal interpretations, and precedents relied upon to arrive at the decision in favor of the appellant regarding the availment of Cenvat credit for duty paid by the job worker.

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