TMI Blog2010 (1) TMI 421X X X X Extracts X X X X X X X X Extracts X X X X ..... mporting raw materials required in the manufacture of their final products. 2. The officers of the preventive Section of the Central Excise department searched the factory premises of the Appellant and during the panchnama proceedings, it was observed that the Appellant had imported raw materials like Beta Napthol, 6 Nitro, PNA, H Acid etc. both on payment of Customs duty as well as without payment of Customs duty under various schemes such as advance authorisation scheme/advance licencing scheme/DEEC scheme and Target Plus scheme. While co-relating the raw material imported under advance authorisation scheme and target plus scheme with the inputs consumed for manufacture of final products, it was noticed that the input Beta Napthol was cleared as such without subjecting it to any further process after import by the Appellant. The Appellant had cleared the imported Beta Napthol under the cover of job work challans. Similarly, Beta Napthol procured from the domestic market had been cleared under the cover of job work challans. However, there was no entry in the records showing that the processed goods were received back after job work. During the investigation, it appeared that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion is pending and because of the shortage of Members, the matter has not been listed since Division Bench in Ahmedabad Tribunal is available only for limited time. 5. Once again on 4th January, 2010, the learned Advocate mentioned the matter before us and submitted that as per Tribunal's direction, he had written a letter to Assistant Commissioner, Division III, Ahmedabad I on 3rd November, 2009 and in spite of this, the Assistant Commissioner proceeded to adjust the penalty amount from the rebate claimed which was found admissible to them. He also submitted that in this case, the entire amount of duty had been deposited by the Appellant and in the normal course, the Appellant would have got an unconditional stay against the recovery of penalty having regard to the facts and circumstances of the case. 6. The Tribunal wanted to take up the matter relating to stay on the same day in view of special circumstances in this case. However, the learned SDR submitted that he was not prepared and therefore, the matter was fixed for hearing on 6th January, 2010. On 6th January, 2010, when the matter was taken up for hearing, the learned Advocate on behalf of the Appellant submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red by both these decisions, Revenue has no case and therefore, the appeal may be allowed. He also submits that there is actually no Revenue loss at all. The whole exercise is Revenue neutral. What has happened in reality in this case is that the Appellant imported Beta Napthol procured in the domestic market and took the credit of duty paid on the same and cleared it for job work. They had correctly followed the provisions of Rule 4(5) of CENVAT Credit Rules, 2004. According to him, Rule only requires that if the goods are not received back within 180 days, the credit is required to be reversed. The Rule does not prescribe any proforma. He submits that they had used proforma which has been prescribed earlier for job work under Rule 57F2 of CENVAT Credit Rules (erstwhile Central Excise Rules, 1944). He also submits that the job worker on receipt of the input, also added some additional material, and chose to pay duty on final product. He submits that since the job worker paid duty again, the Appellant had no alternative but to take credit of the same in their account since otherwise they had to pay the excess duty on the intermediate goods and has to forgo the benefit of CENVAT Cre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the factory for the purpose of manufacture of intermediate products so that they are returned to the factory for further use in the manufacture of final products. In such a case the credit is taken by the manufacturer of the final products on the inputs purchased by it which are made available to the intermediate product produces. MODVAT credit is taken by the manufacturer of the final product on the inputs supplied by it to the manufacturer of the intermediate products which credit is reversed ultimately when the final product is removed from such manufacturers' factory. As far as the Appellant, (the intermediate purchaser) is concerned, it is not liable to pay duty on the inputs supplied by TELCO since it had not taken the credit for the MODVAT in respect of inputs. It is submitted that it cannot be called upon to pay the duty in respect of those inputs nor can the value of the inputs be added to the excisable value of the assemblies. 6. We are of the view that the submission of the Appellant is correct. The Tribunal appears to have been confused between the manufacture of the final product, namely, excavators and the manufacture of the intermediate product, namely, the floo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are the job workers just to pay duty. If the Appellants reverse the credit, it would only result in additional paper work without any benefit to any of the parties. Because Appellant did not do paper work, they are in trouble. Either way, job worker or the Appellant would be in trouble. In this case, the job worker has chosen to pay duty to avoid problem for himself. Further, we also notice that whatever credit has been taken is of the actual duty paid to the Government and it is not the case of the department that credit has been taken of the duty which was not paid by the supplier. Therefore, viewed from any angle, we are not convinced that there is dual benefit. Another submission made was that in the case of M/s International Auto Ltd., the Hon'ble Supreme Court was considering the issue of job work. It was submitted in this case by the department that what has been done is not the job work. In our view, it is not really relevant. Appellant sent goods under job work challan but the job workers sent the same back under an invoice. Now, the Rules do not prescribe any format or procedure. Rules also do not bar the job worker from paying the duty. After all job workers cannot be c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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