TMI Blog2009 (10) TMI 815X X X X Extracts X X X X X X X X Extracts X X X X ..... were subsequently cleared to the Appellants on payment of Central Excise duty. b. Consequent to the visit of the Preventive Officers to the factory premises of the Appellants on 10-10-2005, proceedings were initiated against the Appellants on the basis that they were not getting back any goods duly processed after job work from either M/s. Leo Circuit Boards Pvt. Ltd. or from M/s. Hermes Electronics, since both these units used the said inputs, received under job work challan in the manufacture of Printed circuit boards assemblies (PCB assemblies) cleared to the Appellants on payment of Central Excise duty. The officers also visited M/s. Leo Circuit Boards Pvt. Ltd. and M/s. Hermes Electronics. The aforesaid units, at the behest of the officers, discharged the Central Excise duty and interest to the extent of the cost of the said inputs not taken into consideration in determination of transaction value, while discharging Central Excise duty in respect of Printed Circuit Board assemblies cleared to the Appellants. c. While duty on the inputs sent by the Appellants to M/s. Leo Circuit Boards Pvt. Ltd. M/s. Hermes Electronics was recovered from the aforesaid units, it was al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellants on the raw material supplied by them to M/s. Leo M/s. Hermes Electronics. More so, in view of the fact, that duty had already been discharged by M/s. Leo M/s. Hermes Electronics on the value portion of raw material received by them from the Appellants. d. In the event that demand for reversal of credit by the Appellants were to be confirmed, M/s. Leo M/s. Hermes would invariably be entitled to credit on the raw material received by them from the Appellants. Thus the stand taken by the department in the notice was at cross-purposes since on the one hand, duty had already been recovered from M/s. Leo/M/s. Hermes Electronics on the value portion of the raw material supplied by the Appellants whereas on the other hand, the notice sought to reverse the credit on the raw material supplied by the Appellants to M/s. Leo M/s. Hermes. At no point of time did the department suffer any loss of revenue on account of the aforesaid practice being followed by the Appellants, M/s. Leo Circuit Boards Hermes Electronics. 6. The Departmental Appeal against the aforesaid order was allowed by the Commissioner (Appeals) on the ground that since the Appellants had placed purchase ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999 (114) E.L.T. 608 (Tribunal) It was also submitted that on the basis of the factual matrix of the case, the adjudicating authority had given a categorical finding that the Department did not suffer any revenue loss at any point of time on account of the practice being followed by the Appellants, M/s. Leo Circuit Boards Hermes Electronics. The above finding as to revenue neutrality has not been upset by the Commissioner (Appeals). It was submitted that when the revenue neutrality was not disputed by the Commissioner (Appeals), there was no basis to demand duty towards Cenvat credit from the Appellants. The following judgments were relied upon in the context of revenue neutrality :- a. Commissioner of C. Ex. Cus., Vadodara v. Narmada Chematur Pharmaceuticals Ltd. - 2005 (179) E.L.T. 276 (S.C.) b. Commr. of Central Excise Cus. (Appeals), Ahmedabad v. Narayan Polyplast - 2005 (179) E.L.T. 20 (S.C.) c. Commissioner of C. Ex., Pune v. Coca-Cola India Pvt. Ltd. - 2007 (213) E.L.T. 490 (S.C.) d. Commissioner of Cus. C. Ex. v. Textile Corporation Marathwada Ltd. - 2008 (231) E.L.T. 195 (S.C.) e. Commissioner of C. Ex., Jamshedpur v. Jamshedpur Beverages - 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f C. Ex. Chandigarh v. Karam Chand Appliances Pvt. Ltd. - 2009 (238) E.L.T. 706 (H.P.) d. S.K. Foils Ltd. v. Commissioner of Central Excise, New Delhi-III - 2009 (239) E.L.T. 395 (P H) e. Union of India v. Dharamendra Textile Processors- 2008 (231) E.L.T. 3 (S.C.) 9. I find that the Show Cause Notice clearly records the fact that the Appellants were sending the inputs such as inductor coil, hybrid circuits, heat sink thermistors etc. for processing to M/s. Leo Circuit Boards Pvt. Ltd. and M/s. Hermes Electronics under the cover of the Job work Challan as per the procedure laid down in Rule 4(5) (a) of the Cenvat Credit Rules. It is further recorded that the said inputs were being fitted on the PCBs by the aforesaid units and subsequently cleared to the Appellants on payment of the Central Excise duty. What is averred in the Show Cause Notice is that since the two units have cleared Printed Circuit Board Assemblies (PCB assemblies) to the Appellants on payment of Central Excise Duty, the Appellants were not getting back any goods duly processed under the job-work either from M/s. Leo Circuit Boards Pvt. Ltd. or from M/s. Hermes Electronics. Consequently, the impugned noti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said inputs were sent for processing to the two units. Furthermore, the processed goods viz. assembled PCBs were sent to the Appellants by the two units, albeit on payment of duty. Under the circumstances, the sending of the inputs by the Appellants under Rule 4(5) (a) challans to the two units cannot be faulted with. Though the Commissioner (Appeals) has proceeded on the basis that the Appellants were issuing purchase orders to the two units and thus the transaction was not job work but on principal to principal basis yet it is significant that the charges against the Appellants in the impugned notice are not framed on the basis of the said purchase orders but on the sole basis that M/s. Leo Circuit Boards Pvt. Ltd. M/s. Hermes Electronics were clearing the PCB assemblies to the Appellants on payment of duty. Thus the Commissioner (Appeals) has proceeded on a basis extraneous to the impugned notice. 10. In the present case, even if the Appellants were to follow the procedure under Rule 3(5) of the Cenvat Credit Rules and reverse the credit on the inputs sent for processing, the said credit would have been ultimately available to the Appellants in the manufacture of the El ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case, the Appellants were entitled to the Cenvat credit on the inputs sent for processing and on the assembled PCBs, when paying duty on the Electronic Balances. Thus the ratio of the Apex Court Order in the aforesaid case is squarely attracted and the demand raised in the impugned notice cannot be sustained. The following Orders of the Hon ble Apex Court holding that there can be no sustainable demand in a revenue neutral situation are also squarely applicable in the context of Appellants case :- a. Commissioner of C. Ex. Cus., Vadodara v. Narmada Chematur Pharmaceuticals Ltd. - 2005 (179) E.L.T. 276 (S.C.) b. Commr. of Central Excise Cus. (Appeals), Ahmedabad v. Narayan Polyplast - 2005 (179) E.L.T. 20 (S.C.) c. Commissioner of C. Ex., Pune v. Coca-Cola India Pvt. Ltd. -2007 (213) E.L.T. 490 (S.C.) d. Commissioner of C. Ex. Jamshedpur v. Jamshedpur Beverages - 2007 (214) E.L.T. 321 (S.C.) 11. The interim order of the Tribunal in the case of M/s. Tata Motors Ltd. v. Commissioner of Central Excise, Pune-I, cited by the learned SDR, cannot be applied in the present context. In the said case, the issue was whether the Job worker could take Cenvat credit on his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourt held that carbon copy of the invoice was not a valid document for taking Cenvat credit as there was no provision for granting Cenvat credit on the basis of carbon copy and the original copies of invoices were required to be produced. In all the aforesaid cases, the concerned Hon ble High Courts held that the compliance pertaining to the specifications could not be relaxed as there was a possibility of fraud and misuse, which could be damaging to the revenue. The above decisions cannot be made applicable in the present case, where the situation is undisputedly revenue neutral and the eligibility of the Appellants to the Cenvat credit on the inputs sent to the two units remains undisputed. In the present case, there are no revenue implications involved and the demand against the Appellants is unsustainable as held by the various Orders of the Apex Court referred to earlier. In the context of the present case, the Judgment of the Hon ble Apex Court in the case of Union of India v. Dharamendra Textile Processors- 2008 (231) E.L.T. 3 (S.C.) is inapplicable as there is no dispute to the availability of the credit on the inputs and there are no revenue implications involved. 12. I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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