TMI Blog2018 (12) TMI 1087X X X X Extracts X X X X X X X X Extracts X X X X ..... t Rules, 2004, if the capital goods were not received back within two years from the job worker, the manufacturer had to pay an amount equivalent to the CENVAT credit attributable to the capital goods by debiting the CENVAT credit account - In this case, the capital goods have not been received back from the first job worker even after three years and it is felt that the first principal manufacturer has not paid the Central Excise duty or debit the CENVAT account. Since, the duty has not been paid, the applicant is liable to pay GST while transferring the capital goods from the first job worker to the second job-worker namely M/s. Vasanth Tools Crafts Pvt. Ltd. The provisions of Rule 117 (Transitional Provisions) of the CGST Rules, 2017 provide for tax or duty to be carried forward under any existing law or on goods held in stock on the appointed day. The applicant has not brought on record any details to show that either the first Principal manufacturer or the applicant has submitted the declaration electronically in FORM GST TRAN-I and included the said capital goods in his TRAN-I, as provided under Rule 117 of the CGST Rules, 2017 - Since the details regarding the subject goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AVING A BEARING ON THE QUESTIONS: That originally machines moulds were transferred to M/s. Shaily Engineering Plastics limited directly by the supplier of the principal manufacturer namely M/s. MWV India Pvt. Ltd. That further in August 2017 M/S. MWV India Pvt. Ltd. sold part of business under Slump Sale vide BTA dt. 31.08.2016 to Aphrodite Packaging Solutions Pvt. Ltd including subject item of capital goods. Thereafter, the name of the company was changed to M/s. Silgan Dispensing Systems India Pvt. Ltd. form Aphrodite Packaging Solution Pvt. Ltd. Your reference kindly find attached herewith the Name Change Certificate dated. 13.11.2017 marked as ANNEXURE-I. That accordingly, the present application is being filed by M/s. Silgan Dispensing Systems India Private Limited (hereinafter referred to as Appellant). That as informed above the principal manufacturer M/s. MWV India Pvt. Ltd. during the period 2012 had sent machines/ moulds for job work to M/s. Shaily Engineering Plastics Limited (hereinafter referred to as job-worker ). Brief description the goods sent is attached herewith marked as ANN-II. That subsequently, the Appellant now propose to transfer said machin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19. Zara-1 Tooling Zara-1 7,29,39,043 20. Cavity Insert TS-800 14,31,255 21. Ergo valve Body Mold TS-800 69,95,374 22. Ergo valve Body Mold Spare Parts TS-800 26,176 23. Injection Mould TS-800 70,86,456 24. Injection Mould Spare Parts TS-800 11,71,351 25. Mannual Assembly Fixture Zara-1 1,23,165 26. U Tube Fixture Zara-1 32,130 27. Refurbishment of standard value bod (Injection) Mold TS-800 9,53,927 28. Modification in fully automatic assembly machine for pump assembly Zara-1 19,42,707 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said factual background, we draw reference to section 141 of the CGST Act, 2017 which provides for transitional provisions relating to job work. That sub-section 1 of section 141 deals with goods removed to job worker. For your reference the extracts of the relevant provisions are detailed below: 141 . (1) Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with the provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise, are returned to the said place within six months from the appointed day: Provided that the period of six months may, on sufficient cause being shown, be extended by the Commissioner for a further period not exceeding two months: Provided further that if such inputs are not returned within the period specified in this sub-section, the input tax credit shall be liable to be recovered in accordance with the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt not to give interpretation to provisions to render them ineffective or odious. iv. That accordingly when the statue fails to provide any mechanism then intention of the legislature cannot be assumed. Implying thereby that when the legislature fails to provide for an enactment the subordinate legislation cannot not introduce enactment which was otherwise not provided in law. Hence when the transitional provisions have not detailed any provision in respect of capital goods/ moulds then admittedly the same deserve to be cleared without payment of duty when essentially the duty was paid at the time of recipiet of the said goods under the erstwhile Central Excise Act, 1944. v. That further we crave leave to refer and rely upon the CGST Circular no: 38/12/ 2018 dated 26.03.2018. That the said Circular is Issued to bring clarification in respect of job work and related compliance requirement for the principal and the job-worker. vi. That specifically para. 8.4 of Circular dated 26.03.2018 provides that where goods are sent from one job worker to another job worker, the goods may move under Challan issued either by the principal or the job worker. In the alternative, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erred from Shaily (1st Job worker) to Vaganth Tools Crafts Pvt. Ltd (2nd Job worker), hence in light of the said provision of law factual matrix no GST shall be leviable on such transfer of capital goods/ moulds. That further section 141 of the CGST Act, 2017 provides for transitional provisions in respect of inputs specifically, whereby it was provided that if the job worked inputs are returned after six months, the input tax credit shall be required to be returned. That admittedly the goods in questions are capital goods and moulds and in absence of anything specifically c provided in the law for transfer/return of capital goods/mould, provisions of Section 14 of CGST Act,2017 cannot be made applicable to capital goods/mould and the same can be removed even after expiry of six months without payment of any duty. That in light of above factual as well as legal background a ruling is sought in respect of Whether GST is payable when capital goods/moulds are transferred from one job worker to another job worker when originally said capital goods/ moulds were transferred by principal to the 1st job worker under delivery challan under erstwhile C. Ex. Law. Additional Submis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inputs or capital goods, without paymen t of tax, to job workerfor job-work andfrom there subsequently to another job worker and likewise: ii. That accordingly capital goods/ moulds transferred from M/s. Shaily (i.e.) 1st Job worker to M/s. Vasanth Tools Crafts Pvt. Ltd (2nd Job worker) are squarely covered by provisions of Section 143 of CGST Act GST on such transfer of capital goods/ moulds is not payable. iii. That further reference is drawn to section 141 of CGST Act, 2017, the extract of the same detailed below for reference: Section 141: Transitional provisions relating to job work: Where any inputs received at a place of business had been removed as such or removed after being partially processed to a job worker for further processing, testing, repair, reconditioning or any other purpose in accordance with provisions of existing law prior to the appointed day and such inputs are returned to the said place on or after the appointed day, no tax shall be payable if such inputs, after completion of the job work or otherwise , are returned to the said place within six months from the appointed day; That in appreciation of the provision of law detailed s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5)(b) of erstwhile Cenvat Credit Rules,2004 for receipt back Of such capital goods/ moulds by principal manufacturer within stipulated time lime of two years are not applicable as provided in light of Circular No. 637/28/2002-CX., dt. 08.05.2002. Accordingly in appreciation of the Circular dt. 08.05.2002, the stipulated time of two years as provided under rule 4(5)(b) is admittedly not applicable in case where cenvat Credit was availed by M/s. Shaily(being job worker) as consignee/ recipient of goods on behalf of principal manufacturer. vi. That subsequently, the time limit of three years for receipt back of capital goods by principal manufacturer on transfer of the capital goods/moulds under CGST by M/s. Shaily 1st Job worker to M/s. Vasanth 2nd Job worker of the principal manufacturer M/s. Silgan would not be applicable in absence of any restriction stipulated under erstwhile Cenvat Law. Thus, aforesaid transactions of transfer of goods by 1st job worker to 2nd jobworker would be termed as Transfer of Goods under Job Work Procedure should not constitue as Supply That in support of the said contention we wish to draw reference to section 174 of the CGST Act, 2017 which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by legislature - Interest liability upheld - Rule 14 of Cenvat Credit Rules, 2004 read with Section 11AB of Central Excise Act, 1944. ix. That similarly, the Hon ble Gujarat High Court in the case of Goyal Traders as reported in 2014(302) ELT 529 = 2011 (8) TMI 720 - GUJARAT HIGH COURT has explained that Amendments, either creating fresh liability hitherto not existing, or extinguishing accrued rights would be considered prospective unless the statute either specifically or by necessary implication gives such provision retrospective effect. x. That the Principal bench, New Delhi under similar situation in the case of Gwalior Alcobrew Pvt. Ltd as reported in 2017(309) ELT 692 = 2014 (8) TMI 880 - CESTAT NEW DELHI has held that Interest on differential duty levied on finalization of provisional assessment - Sub-section (3) of Section 18 of Customs Act, 1962 was not in force on the date of filing of Bills of entry nor existing even on the date of finalisation of provisional assessments but was enacted on 13-7-2006, hence not applicable to the case of appellant because it is, by now, well settled that statutory amendments, either creating fresh liability hitherto not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions for receipt of capital goods by job worker under erstwhile Central Excise Act, 1944, the transactions of subsequent transfer of capital goods/ moulds from 1st job worker to 2nd job worker upon request of principal manufacturer under job work process would not constitute as Supply accordingly GST is not payable on such transfer. Additional Submissions on 26.07.2018 This is reference to above subject matter. That in light of the hearing dt.26.07.2018, Your Honour had insisted upon clarification in respect of Cenvat credit in relation to capital goods availed by job worker. That accordingly, we carve leave to refer and rely upon the case of Uni Cast Pvt Ltd. as reported in 2016 (331) E.L.T. 369(All.) = 2015 (10) TMI 375 - ALLAHABAD HIGH COURT , whereby the Hon ble Allahabad High Court has held and clarified that Cenvat credit can be availed by the Job-worker, the extract of the said case law is annexed herewith and marked as ANNEXURE-A. Further in support of the contention we also wish to refer to case of German Remedies Ltd. as reported in 2002(144) ELT 606 (Tri.-Mumbai) = 2002 (4) TMI 140 - CEGAT, MUMBAI , extract of the same is annexed herewith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed no right, privilege, obligation or liability acquired can be made applicable to the present Act. That in light of the said submission we make a humble request before your Honour to kindly appreciate the factual as well as legal position as involved under the present application and pass an appropriate order. 03. CONTENTION - AS PER THE CONCERNED OFFICER The submission, as reproduced verbatim, could be seen thus- It is submitted that, Issue on which advance ruling is required : M/s. Silgan Dispensing Systems India Pvt. Ltd., 37/1966, Omkaram, Gandhi Nagar, Service Road, Kherwadi, Bandra(East), Mumbai 400051, (here in after referred to as the applicant ) has filed above detailed application under Section 97 of the Central Goods and Service Tax Act, 2017 read with Rule 104 (1) of the CGST Rules, 2017 seeking advance ruling on. (i) Whether on transfer of machines moulds (being capital goods ), from the premises of the job-worker to another job-worker, which were originally received by said job worker under the erstwhile Central Excise Act, 1944 will constitute as supply under GST. 2. M/s. Silgan Dispensing Systems India Pvt. Ltd., registered under GST ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESH HIGH COURT - IDBI Ltd. c. 2012 (281) ELT 321 (Mad.) = 2012 (10) TMI 832 - MADRAS HIGH COURT - Nirma Ltd. d. 2010 (262) ELT 50 (SC) = 2010 (7) TMI 556 - SUPREME COURT OF INDIA - Balwant Singh. 4. Further, the applicant relied upon Para 8.4 of the CGST Circular No.38/12/2018 dated 26.03.2018, which provides that where goods are sent from one job worker to another job worker, the goods may move under challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein and quantity description of goods being sent. 5. Further, the applicant submitted that on bare perusal of the above detailed clarification a clear understanding can be attained that if the job worker intends to move goods to another job worker the same can be done by issuing a Challan either by the principal or the job-worker on endorsement of the challan by the principal. Implying thereby that the goods can be transferred by the principal manufacturer from one job-worker to another job-worker without any GST. Accordingly, in absence of any transitional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) If the capital goods are not received back within the time specified (i.e. two years) by the manufacturer, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to the capital goods by debiting the CENVAT credit. In this case, M/s. MWV India Pvt. Ltd., (ie. first principal manufacturer) sent capital goods for job work to M/s. Shaily Engineering Plastics Limited (job worker) during the period 2012-13 2013-14. The applicant has taken over the business (including the capital goods) of first principal manufacturer in August, 2017. Till such time the capital goods was there with the Job worker viz. M/s. Shaily Engineering Plastics Limited (i.e. from 2012-13, 2013-14 to August, 2017, more than 3 years). As per the above Cenvat Credit Rules, 2004, if the capital goods are not received back within two years from the job worker, the manufacturer has to pay an amount equivalent to the CENVAT credit attributable to the capital goods by debiting the CENVAT credit account, In this case, the capital goods are not received back from the job worker i.e. M/s. Shaily Engineering Plastics Limited even after three years and it appears that the first principal ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily Engineering Plastics Limited) in 2012-13 and 2013-14. b) The Job Worker had been paying Central Excise Duty while clearing the finished goods/semi finished goods to the Principal Manufacturer (M/s. MWV India Pvt. Ltd.,) or otherwise. c) the first principal manufacturer has submitted the declaration electronically in FORM GST TRAN 1 and included the said capital goods in his TRAN-I (as on 30.06.2017) or otherwise; d) When the applicant took over the business of first principal manufacturer in August, 2017, it has to be seen whether the said capital goods are shown in his books of accounts i.e. shown the capital goods as his assets or otherwise; e) the applicant after takeover of business from first principal manufacturer, has filed the declaration electronically in FORM GST TRAN-I and included the said capital goods in his TRAN-1 or otherwise. (i) Considering the facts discussed in foregoing paragraphs, the question framed by the applicant in Point No.14, whether on transfer of machines moulds (being capital goods ), from the premises of the job-worker to another job-worker, which were originally received by said job worker under the erstwhile ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Rule 4(5)(b) of erstwhile Cenvat Credit Rules,2004, provisions of Rule 4(5)(b) of erstwhile Cenvat Credit Rules,2004 for receipt back of such capital goods/ moulds by principal manufacturer within stipulated time lime of two years are not applicable as provided in light of Circular No. 637/28/2002-CX., dt. 08.05.2002. Hence in terms the Circular dt. 08.05.2002, the stipulated time of two years as provided under rule 4(5)(b) was not applicable in case where cenvat Credit was availed by the first job worker as consignee/ recipient of goods on behalf of principal manufacturer. We reproduce the said Circular No. 637/28/2002-CX., dt. 08.05.2002 which is as below:- Circular No.637/28/2002-CX 8th May, 2002 F.No. 267/12/2002-CX-8 Govt of India, MOF, Department of Revenue CBEC Subject: Admissibility of CENVAT credit to inputs and capital goods used by the manufacturer outside the factory premises. Board's attention has been drawn to the Supreme Court judgement in Civil Appeal No.5340-5341 of 2000 in the case of M/s. Jaypee Rewa Cement = 2001 (8) TMI 1332 - SUPREME COURT OF INDIA wherein the Apex Court has held that MODVAT credit on explo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entral Excise Act, 1944. Here they seem to have slipped on the fact that the cenvat credit of the said capital goods had been availed by the first job worker, as stated by them earlier in their submissions. They have also relied upon the CGST Circular no: 38/12/2018 dated 26.03.2018 and have submitted that para. 8.4 of Circular dated 26.03.2018 provides that where goods are sent from one job worker to another job worker, the goods may move under Challan issued either by the principal or the job worker. In the alternative, the challan issued by the principal may be endorsed by the job worker sending the goods to another job worker, indicating therein the quantity and description of goods being sent. Hence according to them, in absence of any transitional provisions for receipt of capital goods by job worker under erstwhile Central Excise Law lying with job worker as on appointed date of GST Law, the transactions of subsequent transfer of said items of machines moulds (being Capital Goods) to another job worker upon request of principal manufacturer under job work process would not constitute as Supply accordingly GST is not payable on such transfer. Under Rule 4(5)(a) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orker; (iii) if the inputs or capital goods, as the case may be, are not received back within the time specified under sub-clause (i) or (ii), as the case may be, by the manufacturer or the provider of output service, the manufacturer or the provider of output service shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods, as the case may be, by debiting the CENVAT credit or otherwise, but the manufacturer or the provider of output service may take the CENVAT credit again when the inputs or capital goods, as the case may be, are received back in the factory or in the premises of the provider of output service. From the submissions made by the applicant we find that they have contravened the above provisions of the Erstwhile CCR, 2004. The goods were not received back by them within the time frame mentioned above and they had also not reversed the credit availed in such case. Now that GST has been introduced in the year 2017, they want to avail the benefit of sending the said capital goods from their first job worker to their second job worker. We find that in the subject case, M/s. MWV India Pvt. Ltd., (ie. first principal manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... II. (2) Notwithstanding anything contained in sub-section (1), (a) activities or transactions specified in Schedule III; or (b) . (3) Subject to the provisions of sub-sections (1), and (2), the Government may, on the recommendations of the Council, specify, by notification, the transactions that are to be treated as- (a) a supply of goods and not as a supply of services; or (b) a supply of services and not as a supply of goods. From the submissions made by the applicant it appears that neither they, nor the first principal manufacturer have carried forward the capital goods into the GST regime by following the procedure prescribed by Section 117 mentioned above. Hence the subject transaction Of transferring the capital goods from the first job worker to the second job worker would be an independent and fresh transaction for which the same would be treated as supply of goods and will be liable to tax under the GST Laws. 05. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services ..... X X X X Extracts X X X X X X X X Extracts X X X X
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