TaxTMI 
TaxTMI 
2015 (11) TMI 899
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....units, viz., Units-I and Unit-II. They manufacture rubber grommets and wiring harness. The Department, based on intelligence, found that the respondent/assessee's Unit-II had wrongly availed Cenvat credit on duty paid on capital goods, which were exclusively used in the manufacture of exempted excisable goods. Therefore, a show cause notice was issued to the assessee for wrongful availment of Cenvat credit and also for imposition of penalty and interest. For better clarity, the show cause notice reads as under :- "(i) Cenvat credit of Rs. 18,19,930/= (Rupees Eighteen Lakhs Nineteen Thousand Nine Hundred and Thirty only) wongly taken on such capital goods in terms of Rule 57-I of the CE Rules, 1944 and Rule 12 of the Cenvat Credit Rules 2001/2002 r/w proviso to Section 11A of the Central Excise Act, 1944, as the case may be applicable during the relevant period, should not be demanded from them; (ii) Duty of Rs. 4,10,147/= (Rupees Four Lakhs Ten Thousand One Hundred and Forty Seven only) due on rubber grommets cleared by them since inception till 28.7.2004 utilising the cenvat credit of duty paid on the capital goods used in manufacture of wiring harness should not be demande....
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.... mandated that no credit of duty paid on input shall be allowed where the final product manufactured out of such input was wholly exempted from the payment of duty of excise leviable thereon or was chargeable to 'nil' rate of duty. It was observed that, in the special procedure laid down under rule 57F (3), duty did not get paid to the job worker's end at the time of clearance of goods, but ultimately got paid at the principal manufacturer's end. In other words, assessable value of the goods cleared by the job worker without payment of duty to the principal manufacturer would ultimately become an ingredient of the assessable value of the final product cleared by the latter on payment of duty. Thus, duty gets paid on the job-worked goods at a later stage and, therefore, such goods cannot be categorized as "exempted goods" for purposes of Rule 57C or Rule 57R. Thus, the Larger Bench decision operates in favour of the respondents." 5. In the instant case, it is not in dispute that the capital goods in question were used for the manufacture of 'wiring harness', which were removed without payment of duty, under job work procedure, to the principal manufacturer.....
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....refore, this Court, shall not interfere with the well considered findings recorded by the Tribunal. It is also further submitted by the learned counsel for the respondent/assessee that the products manufactured by the respondent/assessee is semi-finished products and, therefore, the decision of Kirloskar's case (supra) has no applicability and the Tribunal, taking the entire gamut of facts, has arrived at the just decision and, therefore, no interference is called for with the said finding of the Tribunal. 8. Heard the learned counsel appearing on either side and perused the materials available on record as also the judgments relied on by the counsel for the respective parties. 9. We find that in the present case, the manufacture of wiring harness is done at Unit-I. The inputs are sent by Unit-I to Unit-II, viz., the principal manufacturer to the respondent/assessee for manufacture semi-finished wiring harness and the job-worked goods are cleared under delivery challans and not on payment of duty. The respondent/assessee is availing the exemption under Notification No.214/86-CE for the job work done by the assessee. 10. The contention of the Department is that the Cenvat fac....
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....e, the Notification itself clarifies that the inputs can be used within the factory of production or in any other factory of the same manufacturer." 13. The above principle, laid down by the Supreme Court, was followed in the case of Sterlite Industries Ltd. - Vs - Commissioner of Central Excise, Pune (2005 (183) ELT 353 (Tri. - LB)) by the Larger Bench of the Tribunal, wherein it has been held thus :- "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 directly by him after taking the Modvat credit on the same and clear the processed goods to the principal manufacturer on payment of duty and the principal manufacturer takes the credit of the same in his factory and utilises such credit for payment of duty on his final products at the time of clearance. In such a situation, there can be no objection or ....