CESTAT quashes Excise Duty Demand on Utilizing Cenvated Inputs in Processing on Job Work Undertaken [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), quashed the excise duty demand on utilizing cenvated inputs in processing on job work undertaken.

The appellant, M/s. Rama Ferro Alloys & Finance Private Limited, is a manufacturer of excisable goods and also undertook job-work on the materials supplied by the principal M/s. Modern India Concost Ltd., an EOU under the cover of job-work challan as prescribed under Rule 4(5)(a) of the CENVAT Credit Rules, 2004 by observing all formalities in this regard.

While undertaking such job-work the Appellant also used certain cenvated inputs of their own. On completion of such job work the Appellant sent back the processed materials under the cover of job work challans to their principal manufacturer, who ultimately exported such goods under the cover of B-17 Bond.

Show Cause Notice dated 29.04.2016 was issued alleging that the Appellants have contravened the provisions of Rules 3 and 4 of the CENVAT Credit Rules, 2004 inasmuch as they have wrongly availed the Cenvat Credit of Rs.6 lakhs including Cess during the period from April 2011 to July 2011, on inputs which were used for manufacture of processed goods on behalf of another manufacturer on job work basis.

The Adjudicating authority confirmed the demand as proposed in the Show Cause Notice and also imposed penalty of equal amount under Section 11AC of the Central Excise Act, 1944 read with Rule 15 of the Cenvat Credit Rules, 2004. On appeal, the Commissioner (Appeals) rejected the appeal before him. Hence the present appeal before the Tribunal.

It is the case of the Appellant that the reversal/payment of amount of credit is mandatory only when the final products are either exempted from the whole of duty of excise leviable thereon or chargeable to NIL rate of duty.

A Single Member Bench of the Tribunal comprising PK Choudhary, Judicial Member observed that “It is my considered view that there was no irregularity on the part of the Appellant in utilizing the cenvated inputs in the processing of goods in course of job work undertaken by them. Moreover, there was no contravention of any statutory provisions. In view of the above discussions, the impugned orders cannot be sustained and are therefore set aside.”

To Read the full text of the Order CLICK HERE

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