2018 (6) TMI 1420

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....Sh. P. Sheth & Sh. A. Nainawati ( Advocates ) For Respondent: Shri Sameer Chitakara ( A. R. ) ORDER Per: Ramesh Nair In all these appeals, the common issue involved is that whether the respondents are required to pay an amount under Rule 6(3) of Cenvat Credit Rules, 2004 in the fact that the respondents are working as job worker under Notification No. 214/86-CE dated 25.03.1986. The case of the department is that since the respondents are manufacturing the goods for the principle manufacturer on job work basis and availing the exemption Notification No. 214/1986-CE, the goods are exempted, accordingly they are required to pay an amount under Rule 6(3) of Cenvat Credit Rules, 2004. 2. Sh. Sameer Chitkara, Ld. Additional Commis....

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.... 2004 (171) ELT 145 (SC) 4. We have carefully considered the submissions made by both the sides and perused the records. We find that the Revenue sought to recover the amount as prescribed under Rule 6(3) of Cenvat Credit Rules, 2004 on the ground that the goods manufactured by the respondents is exempted under Notification 214/86-CE, therefore, Rule 6(3) applies. In this regard, we have perused the 3rd Proviso to Rule 3(1) of Cenvat Credit Rules, 2004 which reads as under: Rule 3, Cenvat Credit -........................................................... .......................................................................................... .......................................................................

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....under Notification 214/86- CE, the Cenvat Credit in respect of inputs used in the said goods is admissible. Therefore, Rule 6(3) shall not apply in the present case. This issue has been specifically considered by the Larger Bench of this Tribunal in the case of Sterlite Industries (India) Ltd. (Supra), wherein the Larger Bench has passed the following order: "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 o....

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....hargeable to nil rate of duty. As such, to attract the provisions of Rule 57C, two situations in respect of the final product should be satisfied. Either the final product should be exempted, which situation can arise only when there is an exemption notification issued under Section 5A of the Central Excise Act or the final product is chargeable to nil rate of duty. Expression chargeable to nil rate of duty or exempted from whole of duty was considered by the Tribunal in the case of Orissa Synthetics Ltd. v. Collector of Central Ex. [1995 (77) E.L.T. 350 (Tri.)] and after taking note of the Ministries clarifications issued vide Circular No. 10/75/CX. 6, it was held that clearance under goods under provision of 191BB for export without payme....

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....ile interpreting Rule 57C of the Central Excise Rules, the Tribunal rejected the appellants claim of Modvat credit of duty paid on the inputs used in the manufacture of the parts, which were cleared without payment of duty to, appellant's other unit under Chapter X procedure and utilised in the manufacture of tractor which were cleared on payment of duty by observing that since no duty was paid on the part at the time of clearance, Rule 57C will apply and no Modvat credit would be admissible. However, the said decision was subsequently reversed by the Supreme Court as reported in Escort v. C.C.Ex. [2004 (171) E.L.T. 145 (S.C.)]. For appreciation, we reproduce paragraphs 8 & 9 of the said decision. "8. It is to be seen that the ....