TaxTMI 
TaxTMI 
2026 (1) TMI 1008
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....re the Tribunal, which were disposed of vide common Final Order No. A/85237-85240/2022 dated 28.03.2022, in the following manner: (i) Appeal No. E/843/2009 was partly allowed by reducing the penalty imposed on Shri Prakash Jokhani from Rs.20,00,000/- to Rs.5,00,000/-; (ii) Appeal No. E/844/2009 were also partly allowed by holding that the CENVAT credit availed after revocation of Rule 12B with effect from 9.7.2004 is in order and upheld part of the duty demand to the extent of Rs.1,21,61,218/- being fraudulently availed CENVAT credit along with interest under Section 11AB of Central Excise Act, 1944 and penalty under Rule 13 of CENVAT Credit Rules read with Section 11AC of Central Excise Act, 1944. (iii) Appeal No. E/852/2009 filed by Shree Nathji Textiles was allowed; and (iv) Appeal No. E/911/2009 filed by the Revenue was dismissed as infructuous. 2.2 The said order dated 28.03.2022 of the Tribunal, disposing the Excise Appeal No. 844 of 2009 was assailed against by the appellant M/s Venus International, by way of filing the appeal before the Hon'ble High Court of Bombay, which was listed as Central Excise Appeal No.35 of 2022. The said appe....
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....l Excise Rules, 2002 vide Notification No. 24/2003-C.E. (N.T.) dated 25.03.2003. The said notification had allowed payment of duty by the person, who gets yarns or fabrics, readymade garments produced on his account, on job work basis. It was also provided in the statute that the said person is required to comply with all the prescribed procedures, considering itself as a Central Excise assessee. However, the said Rule 12B was omitted in the amending notification No.11/2004-C.E. (N.T.) dated 09.07.2004. As a result of such omission, the principal manufacturer was not permitted to avail the CENVAT credit on the inputs. However, in this case, the appellant continued to avail CENVAT credit on inputs during the period from 09.07.2004 to 30.06.2005. 3.3 During the course of scrutiny of records by the jurisdictional Central Excise officers, it was observed that the CENVAT Credit availed by the appellant during the period 09.07.2004 to 30.06.2005 is irregular inasmuch as it had no facility to manufacture the dyed and printed fabrics and hence, it cannot be termed as a manufacturer of excisable goods in terms of Rule 9 ibid and therefore, the CENVAT availed by it is not permissibl....
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....cted herein below: "[Rule 12B was inserted by Notification No. 24/2003-C.E. (N.T.), dated 25.03.2003, and amended by Notification No. 27/2003-C.E. (N.T.), dated 01.04.2003 and lastly Rule 12B was Omitted by Notification No. 11/2004-C.E. (N.T.), dated 9-7-2004.] Rule 12B. Job work in textiles and textile articles.-(1) Notwithstanding anything contained in these rules, every person (not being an export-oriented unit or a unit located in special economic zone) who gets yarns or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60, readymade garments falling under Chapter 61 or 62 or made up textile articles falling under Chapter 63 of First Schedule to the Tariff Act, produced or manufactured on his account, on job work (hereinafter referred to as "the said person") shall obtain registration, maintain accounts, pay duty leviable on such goods and comply with all the relevant provisions of these rules, as if he is an assessee: Provided that the job worker may, at his option, agree to obtain registration, maintain accounts, pay the duty leviable on such goods, prepare the invoice and comply with the other provisions of these rules. In such a case the provisio....
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....son to the job worker shall contain the following information,- (i) the name, address and registration number of the said person; (ii) the Range, Division and the Commissionerate with whom the said person is registered; (iii) the description, quantity (in terms of kg./m/sq. m) and the value of the goods being sent for the job work; (iv) the date of dispatch of such goods; and (v) the name and address of the job worker. (c) The document pertaining to movement of goods from a job worker to another job worker or from a job worker to the said person shall contain,- (i) the name and address of the job worker (the sender); (ii) the description and quantity (in terms of kg./m/sq. m) of the goods being sent; (iii) the date of dispatch of such goods; (iv) the name and address of the job worker/the said person to whom the goods are being sent (the receiver). (d) The responsibility in respect of accountability of the goods, referred to in sub-rule (3) shall lie on the said person. (5) The job worker, on receipt of the goods mentioned in sub-rule (3) or, as the case may be, from another ....
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.... of doubt, it is clarified that if any goods or part thereof is lost, destroyed, found short at any time before the clearance of yarns or fabrics falling under Chapter 50, 51, 52, 53, 54, 55, 58 or 60, readymade garments falling under Chapter 61 or 62 or made up textile articles falling under Chapter 63 of First Schedule to the Tariff Act or waste, by-products or like goods arising during the course of manufacture of such goods, the said person shall be liable to pay duty thereon as if such goods were cleared for home consumption." 6. On plain reading of the above procedure prescribed under Rule 12B ibid, it transpires that the government had prescribed a detailed procedure for enabling the textile processors who had to depend upon job workers for undertaking various activities before the final products are manufactured by them, which could be cleared for home consumption on payment of duty or exported under claim for rebate. It also provided for availing CENVAT credit facility by complying with various requirements of law such as, issuance of invoice, documentation of movement of goods, maintenance and accounting of goods including generation of waste/scrap, accountability of t....
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....ock of semi-finished or finished goods which contained inputs) on which credit had already been availed, there are two options. He can continue to pay duty on the finished goods made therefrom, at post budget rates i.e. 4% for cotton and 8% for others. Alternatively, he can reverse the credit amount and avail of full exemption on the finished goods. Issue No. 3: Rule 12 B of the Central Excise Rules 2002 (which prescribed special job work procedure for textile traders getting their goods manufactured on job work basis) was omitted vide Notification No. 11/2004- C.E. (N.T.) dated 9 th July, 2004. A number of units which were either not undertaking any activity/ processes or were undertaking processes such as cutting and packing (which does not amount to manufacture) had taken registration as 'said person' under the said Rule 12B. Such persons can not be considered 'manufacturers' and their registered premises can not be considered as 'factory'. Some of such persons have credit balance in their account, have inputs on which such credit is taken, and have stock of finished goods received from job workers. Some of the inputs are with their job wor....
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....uent to the deletion of Rule 12B of Central Excise Rules, 2002, with effect from 9-7-2004, as person, who can issue the invoice and discharge duty liability. 4. We find that the CBE &C Circular No. 345/2/2004-TRU dated 28-7- 2004 have categorically clarified as under :- "..............Hence, from the above it is clear that even after the omission of Rule 12B of Central Excise Rules, 2002, the firm can clear goods lying with them under an invoice after paying Central Excise Duty as per law". 5. It can be seen from the above reproduced portion of the Board Circular that the trader can discharge the duty liability on the goods, which were received by him prior to 9-7-2004...." 7.2 We further find that the Hon'ble High Court of Gujarat in the case of Omkar Textile Mills Private Limited Vs. Commissioner of Central Excise, Ahmedabad-II - 2010 (262) E.L.T. 115 (Guj.) have also held that certain facility was made available as per existing rules, the same cannot be changed to the disadvantage of denial of such benefit, before the credit facility was availed of. The relevant paragraphs of the said judgement is given below: "8. Having heard Mr. Ravani, l....
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....es out of the order of the Tribunal. Both these appeals are accordingly dismissed." Being dissatisfied with the above judgement, though the department had filed the Special Leave to Appeal (Civil) CC No. 8124 of 2009, but the same was dismissed by the Hon'ble Supreme Court, reported in 2016 (332) E.L.T. A84 (S.C.), in upholding the order of the Hon'ble High Court. 7.3 In view of the above discussion and analysis of the legal position as well as the clarification issued by the CBEC (supra), and on the basis of the above decisions of the Tribunal, Hon'ble High Court, Hon'ble Supreme Court, we are of the considered view that the appellants are eligible to CENVAT Credit during the disputed period from 09.07.2024 to 30.06.2005. 8. It is not in dispute that the SCN for recovery of CENVAT credit was issued on 09.08.2005. Further, the addendum was issued after a lapse of more than two years i.e., on 17.09.2007. The basis of such issue of addendum also includes the subsequent investigation, involving search operations conducted on 12.08.2005 and 14.08.2005. Even though it is contended by the department that CENVAT Credit of Rs.1,21,61,218/- is a part of the total amount of CENVAT C....