2022 (4) TMI 424 - AT - Central Excise

Tribunal grants relief to Appellant, allowing Cenvat credit on capital goods for production.

M/s. Amul Crank Case Private Limited Versus Commissioner of Central Excise, Jamshedpur

The Tribunal allowed the appeal filed by the Appellant, following the judgment of the Hon'ble Madras High Court. The decision clarified the eligibility of ... CENVAT Credit - Job-work - capital goods used for the purpose of carrying out intermediate production process on goods supplied by M/s.Tata Motors Limited and removed without payment of excise duty under the procedure prescribed under Notification No.214/86 dated 25/03/1986 - HELD THAT:- The issue is no longer res integra and has been decided by Hon’ble Madras High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE VERSUS M/S. KYUNGSHIN INDUSTRIAL MOTHERSON LTD. [2015 (11) TMI 899 - MADRAS HIGH COURT] where it was held that Tribunal was correct in holding that wiring harness was removed without payment of duty under job work procedure to the principal manufacturer and that semi-finished goods removed by the job worker from its unit to the principal, without payment of duty, would not come within the scope of expression 'exempted final product' used in Rule 57-R (1) equivalent to Rule 6 (4) of the Cenvat Credit Rules, 2004. The Tribunal has rightly held that availment of Modvat Credit on capital goods to be job work is in order. Credit allowed - appeal allowed - decided in favor of appellant. Issues:Whether the Appellant is eligible to claim Cenvat credit on capital goods used for carrying out intermediate production process on goods supplied by another entity without payment of excise duty under a prescribed procedure.Analysis:The Appellant, engaged as a job worker by a company, was involved in machining and turning activities on engine blocks supplied by the company under a specific notification. The Appellant availed Cenvat credit on capital goods for manufacturing cylinder blocks and job work processes. However, a Show Cause Notice was issued for recovery of allegedly ineligible Cenvat credit. The issue revolved around the eligibility of the Appellant to claim Cenvat credit on capital goods used for intermediate production processes on goods supplied without excise duty payment.The Tribunal referred to a decision by the Hon'ble Madras High Court in a similar case, emphasizing the interpretation of Rule 57C of the Central Excise Rules. The Court's decision highlighted that the purpose of the rules was to prevent double taxation and allow credit even if no duty was charged on intermediate products. The Tribunal also cited a case where the denial of Modvat credit to a job worker was questioned, emphasizing that the application of Rule 57C should not frustrate the intended benefit to the assessee. The Tribunal agreed that Rule 57C did not apply if the final product was exempt from duty or charged at a nil rate. The Tribunal upheld the decision that the job worker could have cleared goods with duty payment, and the duty was ultimately paid by the manufacturer.The Tribunal further mentioned cases where similar views were upheld by the Bombay High Court and the Madras High Court, supporting the allowance of Modvat credit for job workers. Ultimately, the Tribunal set aside the impugned order and allowed the appeal filed by the Appellant, following the judgment of the Hon'ble Madras High Court. The decision was made in favor of the Appellant, granting consequential relief as per the law.In conclusion, the judgment clarified the eligibility of the Appellant to claim Cenvat credit on capital goods used for intermediate production processes. It highlighted the importance of interpreting rules to prevent double taxation and ensure the intended benefits to the assessee. The decision aligned with previous rulings and set aside the demand for recovery of Cenvat credit, providing relief to the Appellant based on legal precedents and interpretations of relevant rules.