BANSAL PRECISION FORGE LTD. Vs. THE COMMISSIONER OF CENTRAL EXCISE BANGALORE-II DIVISION, BANGALORE

JUDGEMENT

(1.) AFTER examining the records and hearing both sides, I find that the dispute in this case is regarding CENVAT credit of Rs.2,81,900/ -. The assessee (appellant) had availed CENVAT credit of Central Excise duty and education cess totaling to Rs. 2,81,900/ - on inputs used for job work during the material period. The job worked goods were cleared without payment of duty, to the principal manufacturer, who processed the goods further and cleared the final product on payment of duty. These facts are not in dispute. The show cause notice in this case appears to have been issued on the basis of certain audit objections. One of the objections was irregular availment of CENVAT credit to the aforesaid extent on the inputs used for job work. The show -cause notice in a sketchy manner alleged that the assessee had contravened certain provisions of law by availing the CENVAT credit irregularly. Why was the nature of this irregularity not alleged? Be that as it may, the original authority confirmed the demand after observing inter alia that CENVAT credit of duty paid on inputs used for job work purposes is not eligible as per rule 6 of CENVAT Credit Rules, 2004. Upholding the order of the original authority, the learned Commissioner (Appeals) held that CENVAT credit could be availed by only a manufacturer or producer of final product and that the assessee was not eligible for the benefit which was admissible only to a person who actually brought the final product into existence. The appellate authority also referred to Rule 6(1) of CCR, 2004. The appellate authority also relied on a catena of decisions, copies whereof are supplied by the learned Deputy Commissioner (AR) today. Per contra, the learned counsel for the appellant submits that the issue is squarely covered in their favour by the larger Bench decision in the case of Sterlite Industries (I) Ltd. vs. Commissioner: : 2005 (183) E.L.T. 353 (Tri. -LB). He also relies on Sudhir Forging vs. Commissioner: : 2010 (251) E.L.T. 478 (Tri. -Del.) wherein the larger Bench decision was followed.

(2.) AFTER considering the submissions of both sides, I find that the present issue stands settled in favour of the appellant by the larger Bench in the case of Sterlite Industries (supra), wherein it was held that MODVAT credit of duty paid on the inputs used in the manufacture of final product cleared without payment of duty for further utilization in the manufacture of final product, which were cleared on payment of duty by the principal manufacturer, would not be hit by provisions of Rule 57C of erstwhile Central Excise Rules, 1944. The equivalent provisions of Rule 6(1) of the CENVAT Credit Rules, 2004 appear to have been invoked by the lower authorities against the assessee on an essentially similar set of facts. The ratio of the decision of the larger Bench is therefore squarely applicable to the instant case. In the result, impugned order to the extent it denied the CENVAT credit in question to the assessee is not sustainable. This appeal is allowed.