Principal Manufacturer is entitled to avail Cenvat credit of duty paid by job worker on intermediate goods, who choose to pay duty instead of availing exemption We are sharing with you an important judgement of the Hon’ble CESTAT, Ahmedabad, in the case o f Thermax Ltd. Vs. Commissioner of Central Excise, Vadodara-I [(2014) 51 taxmann 39 (Ahmedabad - CESTAT)] on following issue: Issue: Whether Principal manufacturer is entitled to avail Cenvat credit on duty paid by the worker towards intermediate goods, who choose to pay duty instead of availing exemption? Facts & background: Thermax Ltd. (“the Appellant”) had cleared certain inputs to its job workers as per the procedure laid down under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 (“the Credit Rules”) for manufacture of intermediate goods. The job worker had not taken exemption under Notification No. 214/86-CE dated March 25, 1986 (“the Exemption Notification”) and paid duty on intermediate goods on value including inputs supplied free by the Appellant. Thereafter, the Appellant had taken Cenvat credit of duty paid by the job worker on intermediate goods. The Department argued that the Appellant had taken Cenvat Credit twice on the same inputs viz. first, on receipt from supplier and secondly, by inclusion thereof in value of intermediate goods.Accordingly the Department sought reversal of double credit. Being aggrieved, the Appellant preferredan appeal before the Hon’ble CESTAT, Ahmedabad. Held: The Hon’ble CESTAT, Ahmedabad perusal of the Rule 4(5)(a) of the Credit Rules and relying upon the following cases: Held that the Exemption Notification and Rule 4(5)(a) of the Credit Rules does not mandate compulsory availment of exemption. Since duty was actually paid by job worker, and intermediate goods were different from inputs supplied by the Appellant, the Appellant was eligible for Cenvat credit of duty so paid.
Posted on: Thu, 11 Dec 2014 05:37:27 +0000
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