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2009 (8) TMI 865

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..... ve also taken into consideration their written submissions. The main contention of the Ld. Counsel of the Applicants is that the present issue is covered by the decision of Hon ble Larger Bench of CESTAT, New Delhi in the case of Sterlite Industries (I) Ltd. v. C.C.E., Pune [2005 (183) E.L.T. 353(Tri.-L.B.)]. This contention was vehemently opposed by the Ld. SDR, who distinguished the law laid down by the Larger Bench of the Tribunal and contended that the decision of Hon ble Apex Court in Escorts Ltd. - 2004 (171) E.L.T. 145 (S.C.) has not been correctly applied in the said case of M/s. Sterlite Industries. 3. We consider it appropriate to set out here under the relevant statutory provisions applicable in the present case i.e., Rules 2(h), 2(k), 3 and 4(5)(a) of Cenvat Credit Rules, 2004 : Rule 2(h) final products means excisable goods manufactured or produced from input, or using input service; Rule 2(k) input means (i) all goods, except light diesel oil, high speed diesel oil and motor spirit, commonly known as petrol, used in or in relation to the manufacture of final products whether directly or indirectly and whether contained in the final product or not and include .....

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..... ack in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days , the manufacturer or provider or output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the Cenvat credit or otherwise, but the manufacturer or provider of output service can take the CENVAT credit again when the inputs or capital goods are received back in his factory or in the premises of the provider of output service. From the above statutory provisions contained in the Cenvat Credit Rules, 2004, we find that following are the relevant conditions/stipulations for availing and utilizing the Cenvat Credit : (i) Manufacturer of final product is allowed to take credit: (ii) The credit of duty can be availed for the duties paid on input received in the factory of manufacturer of final product; (iii) Input means all goods ......... used in or in relation to manufacture of final product within the factory of production; (iv) Cenvat Credit can be availed by the manufacturer of final product for the duties paid on any input used in goods se .....

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..... oted para 2 of the decision of Hon ble CESTAT Larger Bench in Sterlite Industries case. 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 of the same in his factory, utilizes other inputs procured directly by him after taking the Modvat credit on the same and clear the processed goods to the principal manufacturer on payment of duty and the principal manufacturer takes the credit of the same in his factory and utilizes such credit for payment of duty on his final product at the time of clearance. In such a situation, there can be no objection or dispute by the Revenue as regards the admissibility of the credit on the inputs received directly by the job worker and utilized in his factory. The only effect of the above procedure adopted by the principal manufacturer and the job worker would be additional paper work. It is basically to avoid such a situation .....

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..... the availment and utilization of the Cenvat credit by the manufacturer of the final product. Admittedly, M/s. Tata Motors are a job worker and not the manufacturer of the final product (car) in the instant case. Since the inputs i.e. the paints are not used in the manufacture of final product by M/s. FIAPL, no credit can bw allowed to the job worker i.e. M/s.Tata Motors, who processed the goods on job work basis under Rule 4(5)(a) and cleared the same without payment of duty to M/s. FIAPL. The Hon ble Supreme Court in case of Escorts Ltd. [2004 (171) E.L.T. 145 (S.C.)] (which has been relied in Sterlite Industries case - supra) has also held that the tractor is the final product manufactured in another factory of M/s. Escorts and further held that the parts would not be the final product and the mere fact that the parts are cleared from one factory of the appellant to another factory of the appellant would not disentitle the appellant from claiming benefit of Notification No. 217/86-C.E. We reproduce the paras 6, 7, 8 & 9 of the Judgment of the Apex Court in M/s. Escorts Ltd. (supra), which reads as follows :- 6. It is the contention of the Respondent, which has been accep .....

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..... e, we find that the Applicants and the principal manufacturer are not the same, as there are no two factories involved herein of the same manufacturer. Accordingly, we respectfully feel that the principles laid down by Hon ble Supreme Court in Escorts case (supra) have not been applied correctly in Sterlite case. Rules cannot be given a go bye to avoid additional paper work. For the sake of argument if we assume and take that M/s. Tata Motors are the manufacturer of the painted body shells, then the next question would arise - how the credit taken on paints (used in job worked goods) can be utilized by M/s. Tata Motors as they are clearing the job worked goods under Rule 4(5)(a) without payment of duty. The scheme of Cenvat Credit is quite clear in this respect. The Cenvat Credit taken can be utilized for payment of duties on the final product. Admittedly, the case before us is that the painted body shells have been cleared without payment of duty by M/s. Tata Motors. This is the reason that Rule 6(1) of the Cenvat Credit Rules, 2004 provides that the Cenvat Credit shall not be allowed on such quantity of input or input service which is used in the manufacture of exempted goods. Th .....

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