TaxTMI 
TaxTMI 
2015 (9) TMI 984
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....nvat Credit of service tax of various services like Rent charges, Security charges and Telephone charges and Inspection charges. The Revenue issued the show cause notice, wherein Cenvat Credit proposed to be denied on the ground that the appellant is a job worker carrying out job under Notification No. 214/86-CE dated 25/3/1986 hence they are not manufacturer therefore not eligible for Cenvat Credit. The adjudicating authority on adjudication denied the Cenvat credit of Rs. 70,839/- and Rs. 8,39,311/- respectively and also imposed equal amount of penalty and demanded interest. Aggrieved by the said adjudication order the appellant filed appeal before the Commissioner (Appeals), who sustained the orders in original and rejected the appeal of the appellant therefore the appellants are before me. 2. Ms. Padmavati Patil, ld. Counsel for the appellant submits that the Commissioner (Appeals) has wrongly held that the appellants are not manufacturer and they are only job worker and denied the Cenvat credit for this reason. She submits that in terms of Section 2(f) of Central Excise Act, 1944 and Rule 2(n) of Cenvat Credit Rules, 2004, it is clear that even the job worker who engaged in....
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.... (iii) which, in relation to any goods specified in the Third Schedule , involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer, and the word "manufacturer" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; Rule 2. Definitions .- In these rules, unless the context otherwise requires,- (a) "capital goods" means:- (A) the following goods, namely:- (i) ------- (ii) ------- (iii)-------- (iv)------- (v) ------- (vi) ------ (vii) ------ (1) --------------------- (2) ------------------ (B) --------- (b) --------- (c) --------- (d) --------- (e) ---------- (f) ------------ (g) ------------- (ij) --------- ....
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....proved the law laid down by CESTAT in the case of Jindal Polymers [2001 (43) RLT 680 (Tri.-Del.) = 2001 (135) E.L.T. 657 (Tri.-Del.)]. We find that in the matter of Jindal Polymers (supra), a division of Jindal Polyester Ltd., were engaged in the manufacture of polyester/polymer chips falling under Chapter 39 on job work basis for Jindal Polyester Ltd. They received main inputs viz. DMT and MEG from Jindal Polyester Ltd. for the purpose of processing/job work in terms of Notification 214/86-C.E., dated 25-3-1986, on which no credit was taken by them. They also procured certain other inputs viz. furnace oil, ammonia, titanium oxide, etc., for use in processing of inputs received from M/s. Jindal Polyester and availed credit on the above inputs. The processed, goods i.e. polyester/polymer chips were cleared without payment of duty under the said Notification M/s. Jindal Polyester Ltd. The Department was of the view that credit was not admissible since Rule 57C of the Central Excise Rules provided that Modvat credit of duty paid on inputs used in the manufacture of final products cleared at nil rate of duty is not admissible if the provisions of Rule 57CC ibid are not followed. Follow....
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.... both a "manufacturer' and a "service provider' at the same time in relation to a particular activity. It is settled proposition in Central Excise matters that a job worker is a "manufacturer' and hence the appellant factory cannot be treated as a service provider rendering exempted/non-taxable service for the manufacturing activity. Therefore, there is no force in the Revenue's contention that the appellant had rendered exempted/non-taxable service to its sister concern located at Athola. 7. In view of the above observations, appeal filed by the appellant is allowed by setting aside the Order of the adjudicating authority." In the Western India forging P. Ltd. vs. CC, Ex, Pune (supra) coordinate Bench of this Tribunal held as under: 7. In this case the appellant is a job worker and the final product which they supplied to the principal manufacturer has suffered duty. Therefore, the issue is to be examined in the scenario whether the final product has suffered duty or not. As per Notification 214/86 the job worker can receive the goods from the principal manufacturer without payment of duty and also procure the inputs on payment of duty and can avail ....
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.... In the case of M/s. Lakoonaa Reactions vs. CCE Ahmedabad (supra) this Tribunal held as under: 2. The appellant had cited the decision of the Larger Bench of the Tribunal in the case of M/s. Sterlite Industries Ltd. as reported in 2005 (183) ELT 353 (Tri-LB), in support of their contention that they are eligible to take credit of duty in respect inputs received directly and used by the job workers. When the matter came up for hearing on 1/4/10, it was noticed that the Commissioner (Appeals) in his order, has observed that the decision of the Larger Bench of the Tribunal in the case of M/s. Sterlite Industries was over-ruled by the Judgment of Hon'ble Supreme Court in the case of M/s. Tata Motors Ltd. The matter was adjourned to enable the learned SRI to get the said decision of Hon'ble Supreme Court. However, when the matter was taken up for hearing today, the learned SDR fairly admitted that the decision in respect of M/s. Tata Motors Ltd. cited by the Commissioner (Appeals) was by the Tribunal as reported in 2009 (242) ELT 353 and not of Hon'ble Supreme Court. Further it was also noticed that the said decision was a stay order and this was overruled by Hon'b....
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.... and such inputs are not hit by exemption to Rule 57A. Notification No. 217/86 [which laid down the procedure for sending the basic raw material to the job worker's factory and receipt of the same in the manufacturer's factory after processing for further utilisation in the manufacture of the final products on which duty is paid by the manufacturer. The notification is mainly intended to avert payment of duty at each intermediate stage and take credit of such duty at each subsequent stage, starting from the basic material, turning out components and finally ending with ultimate final product. Hence, the scope of Rule 57C in such a situation like this has to be constituted in the context of the Modvat scheme and not to destroy the basic concept. 2. The revenue is denying the Modvat credit to the present job worker on the grounds that the inputs were used in the manufacture of the goods which were cleared without payment of duty. Pausing here for a second, let us take a situation where the basic inputs is sent by the principal manufacturer after debiting the Modvat credit taken by him. The job worker takes the credit of the same his factory, utilises other inputs procured ....
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....tter of the Law Ministry that the term "exempted' has a definite connotation. The same as attributed to the notification issued by the Central Government. Similarly, the chargeable to nil rate of duty would refer to the tariff rate being nil and the goods cleared in terms of provision of Rule 199BB would not be covered by the said expression inasmuch as the same are not chargeable to nil rate. In the present case, we find the job worker could have cleared the goods on payment of duty and manufacturer could have claimed credit of the same. It is only under the special procedure laid down in terms of the Rule 57F(3) that the duty does not get paid at the job worker's end at the time of clearance of the goods, but ultimately gets paid at the manufacturer's end. In these circumstances, we are in agreement with the decision rendered in the case of Bajaj Tempo and Jindal Polymers. 3. Apart from the above two decisions, we also note that identical view was taken in the case of Shakti Insulated Wires Ltd. v. CCE & C, Mumbai-V [2002 (149) E.L.T. 668 (Tri.) = 2002 (51) RLT 115 (CEGAT-Mum)] & also in the case of CCEx, Jaipur v. Noorani Textiles Mills [2000 (122) E.L.T. 744 (Tri....
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.... on payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. Inasmuch as, the matter stands decided by the Honourable Supreme Court, we would hold in favour of assessee. 5. As regards the decision in the case of Alpha Lavanlaying down that the Modvat credit could be claimed in such a situation, we find the earlier decision of the Bajaj Auto was not followed. However, in view of the facts that the ratio of Bajaj Auto decision stands approved by the Supreme Court decision in the case of Escort Ltd. referred supra, we are of the view that the Alpha Lavan is no longer good law. 6. In view of the foregoing, we answer the reference in favour of the assessee. The papers may be placed before the original Bench for passing the appropriate orders. In view of the above judgments it is observed that much water was flown on the issue and it has been settled that the job worker, working under Notification No. 214/86-CE is entitled to take Cenvat Credit in respect of input or input services received by him. I also find that apart from the issued settled in the above judgments the Rule 3(1) is also relevant on the question involved in the present case. The....