AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 4
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....OD/impugned orders issued are as follows: - Sl. No. SCN/SOD No /Date Excise Duty (Rs.) OIO/OIA No &date Period & Appeal No 1 SCN 53/2015 -CE dt 01.12.2015 59,64,197/- +Interest+ Penalty 49 &50 /2016 (CE) dated 19.07.2016 November 2014 to March 2015 E/42350/16 2 SOD 35/2016 CE dated 04.05.2016 56,50,567/- +Interest+ Penalty April 2015 to March 2016 E/42351/16 3 SOD 41//2017 CE dated 11. 47,30,458/- +Interest+ Penalty 122/2019 (CTA-II) dated 16.05.2019 April 2016 to June 2017 E/41469/2019 2.1 The brief facts of the case as borne out of the Appeal records are that the appellant receives raw materials, performed quality checks, and clears them to job worker for carrying out the operations of blending, grinding, and addition of additives. The said removal of the raw materials from the appellant to the said job worker, and their eventual return from the said job-worker to appellant were made in terms of Rule 4(5)(a) of the CENVAT Credit Rules, 2004 [CCR for short] - by delivery challans on the onward removal, and on the return by the delivery challan, as well as central excise invoice raised by the job worker. The job worker opt....
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....ob worker. 4.4 The allegations in the Show Cause Notice/ Statement of Demand were on not issuing excise invoice for removal of inputs to job worker and non-reversal of CENVAT credit for as such removal of inputs to the job worker. 4.5 There is no finding in the Order-in-Original or Order-in-Appeal as to why the Appellant is not entitled to send goods to a job worker under Rule 4(5)(a) of CCR. 4.6 The Show Cause Notice has specifically alleged non reversal of credit as required under Rule 3(5) of CENVAT Credit Rules, 2004 and that Rule 3(5) of CENVAT Credit Rules is not applicable in a scenario where credit availed goods are removed only to a job worker. 4.7 There is no question of dual credit considering the fact that the job worker charged duty on the value including the value of materials supplied by the Appellant as well as materials procured by the job worker. 4.8 The issue is settled in favour of the Appellant and relied upon various decisions in their favour and in view their submissions, the demand for reversal of CENVAT is not sustainable and therefore question of interest and penalty does not arise. 5. The Ld. Authorized Departmental Representative Mr. M.....
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.... "Rule 3(5) applies where inputs or capital goods are removed "as such" from the factory (e.g. sale/transfer/clearance as such) and requires payment of an amount equal to the credit availed. Sending inputs/capital goods to a job-worker is dealt with separately by Rule 4(5)(a) - that rule expressly permits sending inputs/capital goods for job-work without reversal, subject to the time-limits/conditions; only if the goods are not received back within the prescribed period the manufacturer/provider must pay an amount equivalent to the credit attributable (and may re-avail credit when the goods are received back). CBEC has also clarified practical aspects (re-credit, time-limits) in Circular No. 990/14/2014-CX-8. Rule 3(5) (CENVAT Credit Rules, 2004) - payment on removal as such: "(5) When inputs or capital goods, on which CENVAT credit has been taken, are removed as such from the factory, or premises of the provider of output service, the manufacturer of the final products or provider of output service, as the case may be, shall pay an amount equal to the credit availed in respect of such inputs or capital goods and such removal shall be made under the cover of an in....
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....and not Rule 3(5) of CCR 2004 as claimed by the Respondent." Therefore, it is clear that the applicable Rule for Job work is Rule 4(5)(a) and not Rule 3 (5) as held by the Respondent. We hereby overrule the application of Rule 3(5) by the Department in the impugned Orders and hold that the correct Rule governing Job work is 4(5)(a) of CCR 2004. 8.6 We find that the impugned Order-in-Original dated 19.07.2016 in Para 20 and 23 has held that: - "Para 20. ......the raw materials (RCH compound and reclaimed rubber) are received by Proventus and after going through quality checks, they are cleared to job workers, M/s Suolificio Linea Italia (India) P Ltd., under the cover of delivery challan, under Rule 4(5)(a) of CENVAT Credit Rules, 2004, for carrying out operations such as blending, grinding and addition of additives. Then the job worked, goods namely compounded rubber (TSH 40059920) is received from the job worker, under Central Excise invoice and delivery challan [under Rule 4(5)(a), challan undergo further process, for blending with carbon. The finished goods compounded rubber with carbon is cleared to market for sale under the cover of challan, Central Excise invoi....
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....s -for further processing by appellant into finished product. It is therefore not clear as to how these facts were ignored while making the findings in para 23 of the impugned order. 8.7.3 By definition under Rule 2(k)(i) of CCR, all goods used in the factory by the manufacturer of the final product are 'inputs'. By this definition, goods received back from job worker for manufacturer for final product are doubtless "inputs". From the very finding of facts in paragraph 20, these inputs received back from job worker were different from the input raw materials sent to job worker. Therefore, the assertion in the impugned order that the goods received from job worker were inputs', does not promote the department's case at all. On the contrary, it validates the CENVAT credit availed by the appellant, which was perfectly in accordance with the rules of eligibility and procedure. The impugned order is totally erroneous and contrary to the law. 8.8.1 Here we find that the Appellant's contention is that the goods received back from the Job worker are intermediate goods and used in their factory of the Appellant for further manufacture. The Respondent on the other hand ....
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....d further there is no condition in the said CENVAT Credit Rules that it should be availed in tandem with Notification 214/86 CE as amended which has been harped upon by the LAA in respected of the SOD mentioned in SI No 3 of the Table above. Our above finding for the Appeal Nos 4235042351/16 are also applicable to Appeal No 42369/2019 as both are based on the same set of facts. 8.11 The Appellant finally submitted that the issue is settled in favour of the Appellant placing reliance on the following decisions: - i. Bharat Heavy Electricals Ltd Vs CCE (2014) 300 ELT 442. ii. Commissioner of Central Excise, Customs and Service Tax Vs. Sarabhai Chemicals (2017) 346 ELT 458. iii. c) Principal Commissioner Vs. Sarabhai Chemicals 2017 (346) ELT A136. iv. Thermax Ltd. v. CCE, Vadodara (2015) (326 ELT 369 v. Bright Steel Mac Fabrics Vs Commissioner of Central Excise (1994) 69 ELT 276. 1997 94 ELT A415. 8.12.1 We have perused all the above decisions and find that in the case of M/s. Bharat Heavy Electricals Ltd. Versus CCE & ST. - Meerut-I [2014 (300) E.L.T. 442 (Tri. - Del.)] it was held that: - "Logically, the ground on which the....
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....nputs excluding excise duty (the credit of which had been taken by the Appellant) plus job charges plus value of any other inputs of their own used by the said job workers for manufacture of the intermediate products. The Department seeks to deny the CENVAT credit of the duty on the intermediate product paid by the job workers on the ground that on the same inputs, CENVAT credit cannot be availed twice - first at the time of receipt the inputs by the Appellant in their factory from the input manufacturers and second time in respect of duty paid on intermediates goods made out of input supplied by Appellant upon receiving the same from the job workers. Logically, the ground on which the CENVAT credit is sought to be denied is totally incorrect. There is no condition in Rule 4(5)(a) of the CENVAT Credit Rules, 2004 that job worker should necessarily avail of full duty Exemption under Notification No. 214/86-C.E. This exemption being a conditional exemption, is not required to be compulsorily availed by job workers. If the job worker decides to pay the duty on the intermediate products manufactured by him on job-work basis for the principal manufacturer, in terms of the judgment of th....