TaxTMI 
TaxTMI 
2014 (10) TMI 444
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....SEIITL was manufacturing CTV chassis for Samsung Electronics India Ltd. (hereinafter referred to as SEIL) on job work basis. For this purpose SEIITL had obtained 10 numbers of Auto Insertion Machines from SEIL valued at Rs. 2,75,483.00 involving duty amounting to Rs. 44,12,877.00. SEIITL had taken credit of 50% duty on these machines amounting to Rs. 22,06,438.00 vide entry no.52 dated 18.10.2001 and balance 50% amounting to Rs. 22,06,438.00 was taken vide entry no. 68 dated 01.05.2002. The statement of Manager Production of SEIITL was also recorded, who deposed that all the 10 numbers of Auto Insertion Machine received from SEIL were being used exclusively for the manufacture of CTV chassis for SEIL. On this basis, the checking team conseq....
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....hri Rahul Sood, Manager (Production) for contravening the provisions of Rule 57E (3), (4) and (5) of the Central Excise Rules, 1944 and Rule 7(1) of Cenvat Credit Rules, 2002?" We have heard Sri Siddharth Shukla, the learned counsel for the appellant and Sri M.P. Devnath along with Sri Nishant Mishra, the learned counsel for the respondents. The learned counsel for the appellant contended that SEIITL was not entitled to avail Cenvat Credit on capital goods, which were used exclusively in the manufacture of goods in view of Rule 6(4) of the Rules. The learned counsel contended that Cenvat Credit cannot be utilised by SEIITL in respect of Auto Insertion Machine, which was exclusively used for job work purpose. The learned counsel conten....
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....ty of excise leviable thereon under any notification where exemption is granted based upon the value of quantity of clearances made in a financial year." From a perusal of Rule 3 of the Rules, it is clear that a manufacturer or producer of final product shall be allowed to take credit on any inputs or capital goods received in the factory including the said duties paid on any inputs used in the manufacture of intermediate products by a job worker and sub-clause (4) of Rule 6 of the Rules provides that Cenvat credit shall not be allowed on capital goods, which are used exclusively in the manufacture of exempted goods. Certain doubts were created as to whether Cenvat credit could be made available on capital goods, which were used in the m....
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.... therefore, clarified that Cenvat credit should not be denied on the capital goods used in manufacturing of intermediate goods exempt from payment of duty which are used captively in the manufacture of finished goods chargeable to duty. 4. Trade & field formations may please be informed suitably. 5. Receipt of the same may be acknowledged. 6. Hindi version will follow." The circular indicates that Cenvat credit cannot be denied on capital goods used in the manufacture of exempt intermediate products exempt from payment of duty, which are used captively in the manufacture of finished goods chargeable to duty. In Commissioner of C.Ex.,Ludhiana Vs. Jainsons Wool Coombers Ltd., 2012 (26) S.T.R. 488 (P & H), the Court held that Ce....
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....ts, which are manufactured from the duty paid inputs, was used in the manufacture of tractors and that the duty was paid on the tractors. The Supreme Court held that in order to prevent the cascading effect if duty is levied both on the inputs and finished goods, credit was available to the appellants so long as duty was paid on the final product. The Supreme Court in Escorts' case (Supra) further held that Rule 57C of the Central Excise Rules, 1944 was not applicable. For facility, Rule 57C of the Central Excise Rules, 1944 is extracted hereunder: "57C Credit of duty not be allowed if final products are exempt.- No credit of the specified duty paid on the inputs used in the manufacturer of a final product (other than those cleare....