TaxTMI 
TaxTMI 
2009 (10) TMI 815
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng fitted on PCBs by both M/s. Leo Circuit Boards, Turbhe and M/s. Hermes Electronics, Turbhe and were subsequently cleared to the Appellants on payment of Central Excise duty. b. Consequent to the visit of the Preventive Officers to the factory premises of the Appellants on 10-10-2005, proceedings were initiated against the Appellants on the basis that they were not getting back any goods duly processed after job work from either M/s. Leo Circuit Boards Pvt. Ltd. or from M/s. Hermes Electronics, since both these units used the said inputs, received under job work challan in the manufacture of Printed circuit boards assemblies (PCB assemblies) cleared to the Appellants on payment of Central Excise duty. The officers also visited M/s. Leo Circuit Boards Pvt. Ltd. and M/s. Hermes Electronics. The aforesaid units, at the behest of the officers, discharged the Central Excise duty and interest to the extent of the cost of the said inputs not taken into consideration in determination of transaction value, while discharging Central Excise duty in respect of Printed Circuit Board assemblies cleared to the Appellants. c. While duty on the inputs sent by the App....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Leo & M/s. Hermes Electronics on the value portion of the input/raw material. Thus there was no necessity to seek reversal of the credit availed by the Appellants on the raw material supplied by them to M/s. Leo & M/s. Hermes Electronics. More so, in view of the fact, that duty had already been discharged by M/s. Leo & M/s. Hermes Electronics on the value portion of raw material received by them from the Appellants. d. In the event that demand for reversal of credit by the Appellants were to be confirmed, M/s. Leo & M/s. Hermes would invariably be entitled to credit on the raw material received by them from the Appellants. Thus the stand taken by the department in the notice was at cross-purposes since on the one hand, duty had already been recovered from M/s. Leo/M/s. Hermes Electronics on the value portion of the raw material supplied by the Appellants whereas on the other hand, the notice sought to reverse the credit on the raw material supplied by the Appellants to M/s. Leo & M/s. Hermes. At no point of time did the department suffer any loss of revenue on account of the aforesaid practice being followed by the Appellants, M/s. Leo Circuit Boards & Hermes Electr....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... E.L.T. 419 (Tri.- Chennai) c. Commissioner of Central Excise, Chandigarh v. Ranbaxy Labs Ltd. - 2006 (203) E.L.T. 213 (P & H) d. Maruti Udyog Ltd. v. Commissioner of Central Excise, New Delhi - 1999 (114) E.L.T. 608 (Tribunal) It was also submitted that on the basis of the factual matrix of the case, the adjudicating authority had given a categorical finding that the Department did not suffer any revenue loss at any point of time on account of the practice being followed by the Appellants, M/s. Leo Circuit Boards & Hermes Electronics. The above finding as to revenue neutrality has not been upset by the Commissioner (Appeals). It was submitted that when the revenue neutrality was not disputed by the Commissioner (Appeals), there was no basis to demand duty towards Cenvat credit from the Appellants. The following judgments were relied upon in the context of revenue neutrality :- a. Commissioner of C. Ex. & Cus., Vadodara v. Narmada Chematur Pharmaceuticals Ltd. - 2005 (179) E.L.T. 276 (S.C.) b. Commr. of Central Excise & Cus. (Appeals), Ahmedabad v. Narayan Polyplast - 2005 (179) E.L.T. 20 (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ng decisions :- a. Order No. S/278-279/WZB/2009/EB/C-II = 2009 (243) E.L.T. 353 (Tribunal) of the Tribunal in the case of M/s. Tata Motors Ltd. v. Commissioner of Central Excise, Pune-I. b. Commissioner of Central Excise v. Spectra Electronics Pvt. Ltd. -2009 (235) E.L.T. 795 (H.P.) c. Commissioner of C. Ex. Chandigarh v. Karam Chand Appliances Pvt. Ltd. - 2009 (238) E.L.T. 706 (H.P.) d. S.K. Foils Ltd. v. Commissioner of Central Excise, New Delhi-III - 2009 (239) E.L.T. 395 (P& H) e. Union of India v. Dharamendra Textile Processors- 2008 (231) E.L.T. 3 (S.C.) 9. I find that the Show Cause Notice clearly records the fact that the Appellants were sending the inputs such as inductor coil, hybrid circuits, heat sink thermistors etc. for processing to M/s. Leo Circuit Boards Pvt. Ltd. and M/s. Hermes Electronics under the cover of the Job work Challan as per the procedure laid down in Rule 4(5) (a) of the Cenvat Credit Rules. It is further recorded that the said inputs were being fitted on the PCBs by the aforesaid units and subsequently cleared to the Appellants on payment of the Central Excise duty. What is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rmes Electronics cannot lead to the conclusion that the Appellants were not getting back any goods duly processed under job work and the averment to that effect in the impugned notice is mis-conceived. The issue of Purchase orders by the Appellants to the two units cannot detract from the fact that the components sent by the Appellants to the aforesaid units were undisputedly inputs for the Appellants and that the said inputs were sent for processing to the two units. Furthermore, the processed goods viz. assembled PCBs were sent to the Appellants by the two units, albeit on payment of duty. Under the circumstances, the sending of the inputs by the Appellants under Rule 4(5) (a) challans to the two units cannot be faulted with. Though the Commissioner (Appeals) has proceeded on the basis that the Appellants were issuing purchase orders to the two units and thus the transaction was not job work but on principal to principal basis yet it is significant that the charges against the Appellants in the impugned notice are not framed on the basis of the said purchase orders but on the sole basis that M/s. Leo Circuit Boards Pvt. Ltd. & M/s. Hermes Electronics were clearing the PCB assembl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....acts so warrant. The Hon'ble Apex Court in the case of Commissioner of Customs and Central Excise v. Textile Corpn. Marathawada Ltd. - 2008 (231) E.L.T. 195 (S.C.) has upheld the order of the Tribunal holding that the Respondent-therein was entitled to Modvat Credit of duty payable at each stage of processing of fabrics when duty was paid at final stage and the situation was thus revenue neutral. In the present case, the Appellants were entitled to the Cenvat credit on the inputs sent for processing and on the assembled PCBs, when paying duty on the Electronic Balances. Thus the ratio of the Apex Court Order in the aforesaid case is squarely attracted and the demand raised in the impugned notice cannot be sustained. The following Orders of the Hon'ble Apex Court holding that there can be no sustainable demand in a revenue neutral situation are also squarely applicable in the context of Appellants' case :- a. Commissioner of C. Ex. & Cus., Vadodara v. Narmada Chematur Pharmaceuticals Ltd. - 2005 (179) E.L.T. 276 (S.C.) b. Commr. of Central Excise & Cus. (Appeals), Ahmedabad v. Narayan Polyplast - 2005 (179) E.L.T. 20 (S.C.) c. Commissione....