Adarsh Kumar Goel, J. - (1.) THIS appeal has been preferred by the revenue under Section 35G of the Central Excise Act, 1944 (for short, "the Act") against the order of the Customs, Excise & Service Tax Appellate Tribunal, New Delhi dated 21.1.2010 proposing to raise following substantial questions of law: (i) "Whether goods cleared without payment of duty under notification No. 214/86 -CE dated 25.03.86 are not 'exempted goods' as mentioned in the Rule 6 of the Cenvat Credit Rules 2004? (ii) Whether provision of Rule 6 of the Cenvat Credit Rules 2004 regarding disallowance of Cenvat Credit on the inputs used in the manufacture of final product which are exempt from duty, are not attracted in case of goods cleared without payment of duty under notification No. 214/86 -CE dated 25.03.86 -
(2.) THE Assessee availed Cenvat Credit as per Cenvat Credit Rules, 2004 (for short, "the Rules") in respect of inputs in manufacture on job work basis. The department raised an objection that the Cenvat Credit was not permissible on inputs used in the manufacture of exempted goods in view of Rule 6(1) of the Rules. Accordingly, proceedings were initiated under Section 11A of the Act. Stand of the Assessee was that under notification No. 214/86 -CE dated 25.03.86, exemption was available subject to the condition that supplier of raw material will either use the goods in manufacture of final product or clear the goods on payment of appropriate excise duty. Reliance was, inter -alia, placed on a larger Bench judgment of the Tribunal in Sterlite Industries Ltd. v. CCE, Pune, 2005(68) RLT 25 and judgment of the Hon'ble Supreme Court in Escorts v. CCE : 2004 (171) ELT 145 : (2004) 7 SCC 214 and also decision of Commissioner (Appeals) in another case. The adjudicating authority upheld the objections of the Assessee with the following observations: 6.5 Thus, the Noticees have rightly availed the CENVAT credit on furl used in the manufacture of forged products and normalization undertaken on job -work basis as duty is to be paid on these goods by the supplier of rawmaterial and show cause notice issued ignoring this position merits to be set aside. 6.6 The Commissioner (Appeals), Central Excise Commissionerate, Ludhiana has already in an another case of the Noticees relating to earlier periods allowed their appeals vide Order in Appeal No. 350 -351/CE/Appl/Ldh/04 dated 19.04.2004 (copy enclosed) and set aside the orders -in -original demanding reversal of credit. The same view is also taken in the case of Modi Sales, Ludhiana vide Order -in -appeal No. 139/CE/CHD/06 dated 27.02.06. In the case of Modi Sales, their earlier order -in -original on the same issue has already been accepted by the department as mentioned in this order -inappeal. In addition to this, the Ld. Assistant Commissioner, Central Excise Division -I, Ludhiana has already in case of M/s Ludhiana Steel Rolling Mills, Ludhiana dropped the demand under similar set of circumstances vide order -in -original No. 75/CE/AC/LDH -I/05 dated 30.12.2005. In view of these judgments, the show cause notice does not stand and the same merits to be dropped. The view of the adjudicating authority was upheld by the Commissioner (Appeals) and the Tribunal.
(3.) WE have heard learned Counsel for the Appellant.;