TMI Blog2023 (6) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... payment of duty by the principal manufacturer, would not be hit by provision of Rule 57C. In case of WELSPUN INDIA LTD. VERSUS COMMISSIONER OF C. EX., DAMAN [ 2009 (2) TMI 690 - CESTAT, AHMEDABAD] where the issue was held in favour of assessee. Circular No 54/88-CX dated 01.10.1988 relied in the impugned order, was in context of the rule 173H/173L of the erstwhile Central excise Rules, 1944 and has no application to the facts of the present case. Even if it is to be held that appellant was clearing his finished goods in the garb of job worked goods without payment of duty then also the case of revenue will fail in absence of any additional consideration received by the appellant against such clearances. Demand do not sustain - As the demand for duty cannot be upheld, so the demand for interest and penalties imposed cannot be sustained - appeal allowed. - Excise Appeal No. 773 of 2012 Excise Appeal No. 774 of 2012 - FINAL ORDER NO. 85747-85748/2023 - Dated:- 24-2-2023 - HON BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) And HON BLE DR. SUVENDU KUMAR PATI, MEMBER (JUDICIAL) Shri Mayur Shroff, Advocate, for the Appellant Shri Amrendra Kumar Jha, Deputy Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al excise duty amounting to Rs 14,42,587/- (Rupees Fourteen Lakhs Forty Two thousand Five Hundred and Eighty Seven Only) on the Copper Rods/ Bars Profiles/ Pipes/ Tubes etc cleared from their factory without payment of Central Excise duty (as detailed in Annexure A to the notice) during the period from February 2006 to April 2009, should not be recovered under proviso to sub section 1 of Section 11A of the Central Excise Act, 1944. b. Interest on the aforesaid Central Excise duty short paid should not be demanded and recovered under the provisions of section 11AB of the Central Excise Act. c. Penalty should not be imposed on them under the provision of Rule 25 of Central excise Rules, 2002 and provisions of section 11AC of the Central Excise Act, 1944. d. Penalty should not be imposed on Shri Dinesh H Shah, Managing Director, M/s Ardh Metal and Alloys Pvt Ltd under Rule 26 of Central Excise Rules, 2002. 2.5 The show cause notice has been adjudicated as per the order in original referred in para 1. Appeal filed by the appellants has been dismissed as per the impugned order. Hence this appeal. 3.1 Have heard Shri Mayur Shroff, Advocate for the appellant and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 his factory, utilises 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 utilises such credit for payment of duty on his final products 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 utilised 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 the procedure under Rule 57F(3) has been enacted. As rightly observed by the earlier decision s the mechanical application of Rule 57C which destroys the basic benefit intended to be extended to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Jindal Polymers. 3. Apart from the above two decisions, we also note that identical view was taken in the case of Shakti Insulated Wires Ltd. v. CCE C, Mumbai-V [2002 (149) E.L.T. 668 (Tri.) = 2002 (51) RLT 115 (CEGAT-Mum)] also in the case of CCEx, Jaipur v. Noorani Textiles Mills [2000 (122) E.L.T. 744 (Tribunal)]. 4. In only case of Escorts Ltd. v. CC Ex, Delhi [2003 (160) E.L.T. 623 (Tri-Del.)] while interpreting Rule 57C of the Central Excise Rules, the Tribunal rejected the appellants claim of Modvat credit of duty paid on the inputs used in the manufacture of the parts, which were cleared without payment of duty to, appellant's other unit under Chapter X procedure and utilised in the manufacture of tractor which were cleared on payment of duty by observing that since no duty was paid on the part at the time of clearance, Rule 57C will apply and no Modvat credit would be admissible. However, the said decision was subsequently reversed by the Supreme Court as reported in Escort v. C.C.Ex. [2004 (171) E.L.T. 145 (S.C.)]. For appreciation, we reproduce paragraphs 8 9 of the said decision. 8. It is to be seen that the whole purpose of the Notificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TAhmd)] following has been held: 2. A short issue involved is that the appellant is doing job work for the principal manufacturer and in terms of provisions of Notification No. 214/86 and as such no duty was being paid by them. As they have taken the credit in respect of furnace oil used in the manufacture of said goods, the Revenue entertained a view that 10% of the value of such exempted goods required to be paid by the appellants. Accordingly demand was raised and confirmed along with imposition of penalty. 3. The said order of the Commissioner is impugned before us by the assessee as also by the Revenue on the ground that the goods cleared under job work are neither considered as exempted goods nor goods cleared at Nil rate of duty. The goods cleared from the job worker s premises are at par with the normal clearance except that of shifting duty liability to be discharged on these goods at the hands of recipient principal manufacturers, as held in the following cases :- (i) 2007 (218) E.L.T. 460 (Tri. - Del.) Commissioner of Central Excise Jalandhar v. Kapsons Industries Ltd. (Unit-I) (ii) 2005 (183) E.L.T. 353 (Tri. - L.B.), New Delhi, Sterlite Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ipal manufacturer under the cover of challans issued under Rule 4(5)(a) of Cenvat Credit Rules, 2001 and after completion of job work the goods stand returned to the principal manufacturer - Rule 57F(3) of erstwhile Central Excise Rules, 1944 and Rule 4(5)(a) ibid being independent provisions, fact that goods were not specified in the Notification No. 214/86-C.E. will not make a difference - No duty liability can be fastened upon the job-worker - Section 3 of Central Excise Act, 1944. [para 4] Similarly in the case of Dhana Singh Synthetics Pvt. Ltd. v. CCE, (supra) it was held as under : Demand - Job worker - Fabric received by job worker accompanied with Challans issued under Rule 57F(5) of erstwhile Central Excise Rules, 1944 corresponding to Rule 4(5)(a) of Cenvat Credit Rules, 2002/2004, which returned after processing to principal manufacturer under said Challans without payment of excise duty - Demand raised as processed fabric not exempt under Notification No. 214/86-C.E. - HELD : Inputs received under Central Excise Challans and not under Notification No. 214/86-C.E. - As per C.B.E. C. Circular No. 306/22/97-CX, dated 30-3-1997 for job work undertaken in term ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4)] for clearance of final product used. In the circumstances, we find that the impugned order is inconsistent with the ratio of above decision of the Apex Court (supra). 8. In the International Auto case, Telco had supplied components free of cost to International Auto Ltd. for manufacture and supply of floor plate assemblies. International Auto Ltd. had not taken credit and had not included the cost of free supplies in the value of the intermediary product. The Apex Court held that when the manufacturer supplied inputs free of cost under Rule 57F(2)(b) to the manufacturer of intermediate product who did not take credit of the duty, it was not necessary to include cost of such materials in the value of the intermediate product as the manufacturer of the final product Telco was eligible for the credit of duty paid on all inputs and the intermediate products for clearance of the final product excavators. In the instant case, SRF had received duty paid dipping chemicals on payment of duty and had taken credit. They had not included the cost of the dipping chemicals in the value of NDTCF cleared to Good year. The movement of the inputs was not under Rule 57F(4). The facts of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1999. In the light of the ratio of the Apex Court s decision cited by the ld. Counsel for the (appellants, we find that in the facts of this case, the demand of duty, interest and penalty in the impugned order are not sustainable. We vacate the orders to that effect. The impugned order is otherwise; affirmed as not challenged. The appeal is allowed on the above terms. The appellant shall not claim refund of the duty already paid on this account as undertaken by the Counsel on instructions. This decision has been affirmed by the Hon'ble Supreme Court as reported at [2016 (331) ELT A 138 (SC)] 4.9 Even if it is to be held that appellant was clearing his finished goods in the garb of job worked goods without payment of duty then also the case of revenue will fail in absence of any additional consideration received by the appellant against such clearances. 4.10 As we do not find any merits in the case on the issue involved we are not pronouncing on the issue of limitation. 4.11 As the demand for duty cannot be upheld, so the demand for interest and penalties imposed cannot be sustained. 5.1 Appeals are allowed. ( Order pronounced in the open court ) - - Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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