Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Missing seized records must be considered while testing ITC claim; duplicate GST demands ordered corrected: Delhi High Court. *  GST appeal can’t be rejected without addressing taxpayer’s grounds: Allahabad High Court. *  Surplus IGST credit can offset CGST, SGST shortfall: GSTAT. *  GST refund can’t be denied when cancelled airfares are returned with tax: GSTAT. *  3 Hearing notices issued within 2 minutes: Gujarat High Court flags portal flaw, seeks report. *  GSTR-9, GSTR-9C filing for FY 2025-26 enabled; pending GSTR-1 and GSTR-3B must be filed first. *  Dupattas are exempt fabrics, can’t be taxed as fibres at 4%: Madras High Court. *  Full transitional credit allowed on capital goods received after GST rollout: GSTAT denies Rs. 6.99 lakh export duty credit. *  GST return mismatch alone can’t justify fraud proceedings: GSTAT orders fresh adjudication under section 73. *  Supplier found non-existent later can’t alone justify input tax credit denial: GSTAT. *  GST interest stops once tax reaches government account, can’t run until return filing: GSTAT. *  Cancelled flat booking- GST refund can’t be denied without excluding COVID period from limitation: GSTAT. *  India notifies rules of origin for India–New Zealand FTA. *  Incomplete E-bike kits classifiable as complete vehicles, but not eligible for CKD duty concession: CESTAT. *  Same GST rate on main input and output can’t by itself bar inverted duty refund: GSTAT. *  Unjust enrichment doesn’t apply to customs refunds from assessments finalised before July 13, 2006: Gujarat High Court. *  CENVAT credit can’t be denied solely because plant And machinery are embedded in earth: Karnataka High Court. *  DFIA exports ineligible for RoDTEP benefits; customs directs repayment with applicable interest. *  Second E-Way bill alone doesn’t prove another supply: GSTAT. *  Bail denied in Rs. 1.19 crore fake GST refund case over risk of accused absconding again: Punjab and Haryana High Court. *  GST registration can be restored after revocation deadline if outstanding dues are paid: Gauhati High Court. *  Multiple GST proceedings over same suppliers: Calcutta High Court directs dept. to share findings for adjudication. *  E-Governance portal services not OIDAR, fixed deposit interest not taxable: CESTAT. *  Rs. 500 Stamp duty required on authority letters for CAs, CMA and GST practitioners in Pune GST division.  *  Rs. 1.10 crore GST refund must be paid in cash after business closure: Allahabad High Court. *  Godown rent attracts 18% GST even when used exclusively for exempt agricultural warehousing: AAR. *  GST portal launches "Multi-State Registration" facility: one master TRN for registration applications across multiple States/UTs. *  RoDTEP scheme extended till 31st December, 2026.  *  Mere disagreement with order can’t override Rs. 20 lakh appeal limit: GSTAT. *  Customs interest can’t be backdated before confiscation liability is determined; nearly 8 year period excluded: Delhi High Court.
Subject News *  GST summons: anticipatory bail maintainable without arrest order, but relief denied in evasion case: Allahabad High Court. *  GST Appeal can’t be decided without hearing taxpayer’s objections to fresh evidence: Allahabad High Court. *  GST ITC can’t be reversed merely because supplier grants discount without reducing tax liability: GSTAT. *  Mere quoting of GST provision is not a valid charge: GSTAT quashes ITC denial. *  Personal hearing mandatory before adverse GST order, even without taxpayer’s request: Rajasthan High Court. *  Parallel bail pleas without full disclosure amount to abuse of process Rs. 43.08 crore GST case sent for fresh hearing: Supreme Court. *  GST refund based on unchallenged advance ruling can’t be recovered using later circular: GSTAT. *  Payment of GST alone doesn’t end interest and penalty liability when tax and interest remain unpaid beyond 30 days of notice: GSTAT. *  GST demand over builders’ 80% procurement rule requires reasoned adjudication: GSTAT. *  Eligible ITC doesn’t automatically entitle taxpayers to compensation cess refund on domestic sales: GSTAT. *  GST confiscation order passed before reply deadline invalid: GSTAT. *  GST interest can’t be retained after tax refund on delayed export receipts: Punjab & Haryana High Court. *  GST appeal can’t be dismissed over pre-deposit shortfall without opportunity To respond: Bombay High Court. *  DGGI SCN can’t be challenged before reply and adjudication:Chhattisgarh High Court. *  GST input tax credit can’t be denied solely due to supplier’s retrospective registration cancellation: GSTAT. *  GST notice must explain fraud allegations; merely repeating section 74 Is not enough:  Himachal Pradesh High Court. *  Audit detection alone can’t justify GST fraud penalty; specific suppression must be proved: GSTAT. *  GST order uploaded only under ‘Additional Notices’ tab without separate intimation set aside: Calcutta High Court. *  Service Tax appeal can’t be rejected for missing pre-deposit proof when payment is already recorded: CESTAT. *  SGST dept. can’t hear appeal against CGST order: Calcutta High Court. *  Mere dispatch of tax order can’t prove service or make appeal time-barred: CESTAT. *  Dealer incentives can’t be taxed merely on ledger entries: CESTAT. *  DGFT orders quashed for failure to supply DRI letter relied upon in SCN: Bombay High Court. *  GST penalty u/s 122(1A) can’t apply to Pre-2021 transactions; unregistered beneficiaries also covered: Delhi High Court. *  Expired E-way bill caused by wrong PIN code can’t justify GST penalty without intent to evade tax: GSTAT. *  Used railway rails can’t be taxed as track material without proof they are fit for reuse: CESTAT. *  Earlier DGGI notice doesn’t bar separate GST demand on different issue: Delhi High Court. *  ITC dispute involves no question of law: GSTAT directs appeal to Vice-President. *  Earlier DGGI notice doesn’t bar separate GST demand On different issue: Delhi High Court. *  No E-way bill required for interstate goods movement in november 2017: GSTAT quashes detention and penalty.  

Comments

Print   |    |  Comment

PJ/CASE STUDY/ 2012-13/34
08 December 2012

Whether credit reversal warranted on inputs used in manufacture of goods cleared under Notification no. 214/86-CE that were finally cleared by principal manufacturer on payment of duty?
PJ/Case Study/2012-13/34
 
 
 

CASE STUDY

 
Prepared By: CA Neetu Sukhwani &
 Shreena Anchaliya

 
 

Introduction:- The issue involved in the case is that the assessee is manufacturing excisable goods of other persons under Rule 4(5)(a) of the Cenvat Credit Rules, 2004 read with notification no. 214/86-CE dated 25.03.1986 i.e. assessee is a job worker. The major inputs are supplied by the principal manufacturers but sometimes the same are also made available by the assessee after raising appropriate invoices. Other inputs like Oxygen gas, Nitrogen gas, fuel (BSP & FO), lubricants etc. are used by the assessee from its input stock on which Cenvat credit was availed. The goods manufactured by the assessee from the raw material supplied are exempted from the whole of duty under notification 214/86-CE but the goods manufactured by the assessee itself are cleared on duty. Therefore, the relevant inputs from the common input stocks of the assessee is used in the manufacture of both dutiable as well as exempted goods under notification no. 214/86-CE and accordingly as per Rule-6(1) of the Cenvat Credit Rules, 2004 Cenvat credit is not admissible on such quantity of common inputs and input services used in the manufacture of exempted goods. Under these circumstances the assessee is required to maintain separate records under Rule-6(2) of the credit rules. As the assessee did not fulfill the condition under Rule-6(2) of the credit rules, therefore they were required to pay an amount as per Rule-6(3) of the Cenvat credit Rules.
 

 
 

M/s PRATAP ENGINEERING WORKS. v/s Commissioner, Central Excise, Jaipur II
 [ORDER IN ORIGINAL NO. 65-79/2012/C.EX/JPR-II]

 
Relevant Legal Provisions:
 
·         Notification no. 214/86-CE dated 25.03.1986:
 
This notification seeks to provide exemption to job worker from payment of excise duty on clearance of goods to the principal manufacturer as the principal manufacturer undertakes the liability to pay excise duty.
 
·         Rule 6 of the Cenvat Credit Rules, 2004:
 

Rule 6 (1) provides that Cenvat credit shall not be allowed on such quantity of inputs which is used in the manufacture of exempted goods except in such circumstances mentioned in Rule 6(2).
 
Rule 6 (2) provides that where a manufacturer avails of CENVAT Credit in respect of any inputs except input intended to be used as fuel, and manufactures such final products which are chargeable to any duty as well as exempted goods, then the manufacturer shall maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable final products and the quality of inputs meant for use in the manufacture of exempted goods and take cenvat credit only on that quantity of inputs which is intended for use in the manufacture of dutiable goods.
 
W.e.f. 16.05.2005 the words,” except input intended to be used as fuel”, were omitted from the above sub rule (2).
 
Rule 6 (3) further provides that in case the manufacturer does not maintain separate accounts for receipt, consumption and inventory of inputs meant for use in the manufacture of dutiable and exempted goods, he shall be liable to pay an amount @ 5% or 10% of the value of exempted goods.
 
·         Rule 14 of the Cenvat Credit Rules, 2004 read with proviso to Section 11A(1) of the Central Excise Act, 1994: Recovery of Cenvat Credit wrongly taken or erroneously refunded.-Where the cenvat credit has been [taken and utilized] or has been erroneously refunded, the same along with interest shall be recovered from the manufacturer or provider of the output service and the provisions of section 11A and 11AA of the Excise Act or sections 73 and 75 of the Finance Act, shall apply mutatis mutandis for effecting such recoveries.
 
 
·         Penalty under Rule 15(2) of the Cenvat Credit Rules, 2004 read with section 11 AC of the Central Excise Act, 1944:Confiscation and penalty.-In a case, where the Cenvat Credit in respect of input or capital goods or input services has been taken or utilized wrongly by reason of fraud, collusion, or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Excise Act.
 
 
Issue: - Following issue was made before the CESTAT:
 
Whether credit reversal warranted on inputs used in manufacture of goods cleared under Notification no. 214/86-CE that were finally cleared by principal manufacturer on payment of duty?

Brief Facts:-
 
The assessee, besides manufacturing “Steel Roller” for self, was also manufacturing “steel roller” from steel wire rods supplied to it by M/s National Engineering Industries, Jaipur and M/s Timken India Limited, Jamshedpur on job work basis under Notification No. 214/86-CE dated 25.03.1986 using the inputs on which Cenvat Credit have been taken by them. The assessee was availing Cenvat credit on inputs i.e. oils, lubricants oil, C.I. Sheets etc. in the manufacture of exempted goods (manufactured on job work basis and cleared the same without payment of duty under Notification No. 214/86-CE) as well as on dutiable goods on payment of duty. The assessee has therefore availed Cenvat credit on the total quantity of inputs used in the manufacture of dutiable and exempted goods. A Show cause notice was issued to the assessee alleging that the assessee is availing Cenvat Credit of duty paid on inputs in terms of Rule 3 of the Cenvat Credit Rules, 2004 and it is alleged that the assessee did not maintain separate account for receipt, consumption and inventory of inputs meant for use in the manufacture of exempted goods and avail Cenvat Credit on such inputs. Thus, assessee appears to have not paid an amount @10% during the year 2007-08 in terms of Rule 6(3)(b) of the Cenvat Credit Rules, 2004 of the total price of exempted goods and so the Cenvat credit so availed is recoverable along with interest and penalty.
 
Assessee’s Contentions:-
 
Assessee made following submissions before the Commissioner:-
 
 
Ø  We submit that M/s National Engineering Industries, Jaipur and M/s Timken India Ltd., Jamshedpur has supplied the steel wire rods to us. We have manufactured steel rollers from the steel wire rods supplied by them on job work basis. They are manufacturer of roller bearings and have used the steel rollers supplied by us in the manufacture of roller bearings which is the excisable product and is cleared on payment of excise duty. Since the ultimate manufacturer of such goods has paid duty on his final product there is no need of reversal of CENVAT Credit on the goods removed after doing job work. This ratio decindadia has been laid down by the Hon’ble Tribunal in the following cases:-
o    Ballarpur Industries v/s CCE [2002 (48) RLT 221]
o    Indian Smelting & Refining Co. Ltd. & ANR. v/s CCE, Mumbai[2003 (57) RLT 948]
o    CCE, Chennai v/s M/s UCAL Machine Tools Ltd.-CESTAT, Chennai [2006 (74) RLT 511 (T.)]:-
 
These decisions are clearly applicable in our case and in the light of above, it is clear that when ultimately the duty is payable on the final product, there is no need of reversing the 10% Credit on the goods on which the job work is done. Hence, the show cause notice is not sustainable and is liable to be set aside.
 
Ø  We submit that the CENVAT Credit facility is allowed to streamline the process of payment of duty and to prevent the cascading effect if duty is levied both on the inputs and the finished goods. Rule 57D(2) shows that in the manufacture of a final product an intermediate product may also come into existence. Thus, in cases where intermediate product may also come into existence, credit would be allowed on it so long as duty is paid on the final product. The same view was taken by hon’ble Supreme Court in the cases cited below:-
 
·         Escort v/s CCE [2004 (171) ELT 145 (SC)]
 
·         Sterlite Industries (I) Ltd. v/s CCE, Pune-I [2005 (183( ELT 353 (Tri. LB)]:-
 
“Cenvat/Modvat - Job worker, who received goods from manufacturer   under Rule 57E of erstwhile Central Excise Rules, 1944 entitled to take credit of duty in respect of other inputs received directly and used by him in manufacture of said goods on job work basis - Rule 57F ibid is a self contained provision and goods processed under said rule were being returned to principal manufacturer who was paying duty on the same - Rule 57C ibid not attracted in such a situation.[para 1]”
 
The above stated decision of larger bench also pertains to job work as well as reversal of Cenvat Credit under Rule 6(2) of Cenvat Credit Rules, 2004. Hence it is clearly applicable in our case also. There is clear cut judicial pronouncement in aforesaid decision that there is no need of reversing the credit when certain inputs are used in the job work.
 
Keeping in view the above decisions, there is no need to reverse 10% Credit on the goods removed after job work as duty is paid by the ultimate manufacturer. As such, the show cause notice is not legally sustainable and is liable to be quashed.
 
 
Ø  We submit that the Central Excise Rules and Notifications should be construed harmoniously so as to fulfill the purpose of their introduction in the law. The provisions of disallowing Cenvat Credit on exempted goods are contained in Rule 6(1) of the Cenvat Credit Rules, 2004 earlier known as Rule 57C. The text of Rule 57C is produced as follows:-
“(1)      No Credit of the specified duty shall be allowed on such quantity of inputs which is used in the manufacture of final products which are exempted from the whole of the duty of excise leviable thereon or are chargeable to nil rate of duty except when the final products are either:-
(i)            cleared to a unit in a Free Trade Zone; or
(ii)           cleared to a hundred per cent export-oriented undertaking; or
(iii)          cleared to a unit in Electronic Hardware Technology Park or Software Technology Parks; or
(iv)          supplied to the United Nations or an international organization for their official use or supplied to projects funded by them, on which exemption of duty is available under notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 108/95-Central Excise, dated the 28th August, 1995.
 
(2)        Where a manufacturer avails of the Credit of specified duty on any inputs and he is engaged in the manufacture of any final product which is chargeable to duty as well as in the manufacture of any other final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to nil rate of duty in the same factory, the provisions of sub-rule (1) shall be deemed to be satisfied only when the provisions of sub rule (1) or sub-rule (5) or sub-rule (9) of the rule 57CC are complied with, or where the goods are exported under bond in terms of provisions of rule 13.”  
 
The provisions of reversing 10% Credit on exempted goods in case of common inputs is contained in Rule 6(2) of the Cenvat Credit Rules, 2004 earlier known as Rule 57CC. The provision as contained in both the Rules is similar. New Rule 6(2) of the Cenvat Credit Rules, 2004 is produced as follows:-                                                 
           
“Where a manufacturer is engaged in the manufacture of any final product which is chargeable to duty as well as in any other final product which is exempt from the whole of the duty of excise leviable thereon or is chargeable to NIL rate of duty and the manufacturer takes Credit on the specified duty on any inputs other than inputs other than inputs used as fuel which is used or ordinarily used in or in relation to the manufacture of both the aforesaid categories of final products or not, the manufacturer of both the aforesaid categories of final products or not, the manufacturer shall, unless the provisions of sub-rule (9) are complied with, pay an amount equal to eight per cent of the price (excluding sales tax and other taxes, if any, payable on such goods) of the second category of final products, charged by the manufacturer for the sale of such goods at the time of their clearance from the factory.”
 
The job work can be done either under Rule 4(5)(a) or under Notification no. 214/86-CE dated 25.3.1986. When the job work is done under Rule 4(5)(a), there is no need of reversing10% as goods so cleared are neither chargeable to nil rate of duty nor they are exempted. And Rule 57CC or Rule 6(2) is applicable only when some goods are chargeable to nil rate of duty or are exempted. Further when job work is done while availing benefit of Notification no. 214/86; the interpretation of this Notification alongwith the aforesaid Rule 6(2)/57CC should be done in a harmonious manner. Otherwise, the purpose of introducing these Rules or notification will be defeated. This contention of ours is being supported by the case of Jindal Polymers vs. CCE, Meerut-III [2001 (43) RLT 680]. The relevant para from this case is produced as follows:-
 
“The alternate submission of the assessees is that Notification 214/86 under which the department alleges that they cleared polyster chips without payment of duty is not in the nature of a Notification hit by the bar of Rule 57C of the Central Excise Rules. They submit that the principle laid down in the decision of the Tribunal in the case of Bajaj Tempo Ltd. reported in 1994 (69) ELT 122 relating to applicability of Rule 57C vis a vis Notification 217/86 wherein the Tribunal held that Rule 57C and Notification 217/86, dated 2-4-1986 are to be harmoniously construed so as to avert payment of duty at each stage and postpone availment of credit to the final stage of manufacture, is equally applicable in the context of Notification 214/86 which is relevant to the present issue.”
 
The above decision is equally applicable in our case and in the light of above, it is clear that the Rules and Notifications are issued for the purpose of facilitating the assessees for better compliance of law and hence, they should not be read rigidly. Rather, a sophisticated analysis of the same will serve the purpose for which these are enacted. If these rules and notifications will be read as such, the ultimate aim of their formation, i.e. removing the cascading effect of duty will not be fulfilled. Thus, the show cause notice is not viable and it should be quashed and no demand should be raised against us.
 
Ø  We submit that we have a practice of reversing the proportionate credit attributable to the goods manufactured on job work basis. During the period under show cause notice also we have reversed the proportionate amount of Cenvat Credit relating to job work. It has been held by the highest court of India in the case of Bombay Dyeing & Mfg. Co. Ltd. reported at 2007 (215) ELT 3 (SC). In this case, hon’ble Apex Court has held that reversal of Cenvat Credit before utilizing the same amount to non taking of Cenvat Credit. In this case, the verdicts of Supreme Court are produced as follows:-
           
            “Exemption - Cenvat/Modvat - Exemption subject to condition of non taking of Cenvat credit - Credit taken but before utilisation credit reversed - Amounts to not taking credit - Exemption available - Section 5A of Central Excise Act, 1944.”
 
            The analysis of above judgment makes it ample clear that if the credit so taken is reversed before its utilization, it is assumed as if no credit is taken at all. Similar decisions have been given in the following cases:-
           
·         Hello Minerals Water (P) Ltd. vs. Union of India [2004 (174) E.L.T. 422 (All.)]
           
·         Sagar Twisters vs Commissioner of Central Excise, Mumbai [2005 (188) E.L.T. 497 (Tri. - Mumbai)]
 
·         Commissioner of C. Ex., Mumbai-I vs. Bombay Dyeing & Mfg. Co. Ltd. [2006 (203) E.L.T. 290 (Tri. - Mumbai)]
 
·         Forbes Gokak Mills Limited vs Commissioner of C. Ex., Belgaum [2007 (208) E.L.T. 521 (Tri. - Bang.)]
 
            In all the above cases, it has been held that once the credit is reversed before utilizing the same, it will be deemed as if no credit is taken at all. In our case also, since we have also reversed the proportionate Cenvat Credit attributable to job work before utilizing the same, it will be deemed as if we have not taken the credit at all. As such, the show cause notice is not legally sustainable and is liable to be quashed.
 
            We have reversed the Cenvat Credit of Rs. 35158/- on 1.9.2007 and Rs. 90653/- on 26.4.2008  which was attributable to the clearances of goods removed on job work basis during financial year 2007-08.
 
As such applying the ratio of Apex Court decision in the case of Bombay Dyeing & Mfg. Co. Ltd. [2007 (215) ELT 3 (SC)], the show cause notice is not legally sustainable and is liable to be quashed and no demand, interest or penalty should be imposed on us.
 
Ø  We submit that the show cause notice is contending that we have suppressed the facts from the department for a long time with an intention to evade the payment of duty @ 10% on job work. This contention is liable to be quashed on the grounds that we have duly provided the details as required by your good office vide our letter no. PJ/Excise/K7/08-09/1093 dated 18.06.2008. If we had any ill-intention, we would have not provided the details at all. However, show cause notice has already been issued in this matter and the case is under process with your good office. We however, request your good honour not to issue any show cause notice on the even issue till the matter is finalized. All this makes it clear that there was no willful suppression of facts, hence the department has wrongly invoked the extended period for issuing the show cause notice. As such, the show cause notice is not sustainable and is liable to be withdrawn and neither demand nor interest or penalty is imposable on us.
 
Ø  We submit that we have rightfully taken the Cenvat Credit on the inputs used in the manufacture of goods cleared under Notification no. 214/86 and there is no need of reversing the same @ 10% of the value of such goods. As such, the penalty under Section 11AC is not imposable on us. Even if the contention of the department is accepted then also penalty is not imposable as we acted under bonafide belief that no penalty is warranted. It has been held in the various cases that when any act is done under bonafide belief no penalty is imposable. Some of such cases are cited as follows:-
o    Sri Krishna Alloys vs Commissioner of Central Excise, Salem [2006 (200) ELT 158 (Tri.-Chennai)]
 
o    Asha Pavro Electronics Pvt. Ltd. vs. Commr. Of C. Ex., Mumbai-III [2002 (143) ELT 543 (Tri.-Mumbai)]
o    Navbharat Explosive Co. Ltd. vs CCE, Raipur [2005 (187) ELT 218 (Tri.-Del.)]
 
o    Super Polyfabriks Ltd. vs. Collector of Central Excise, Chandigarh [1999 (114) ELT 1019 (Tribunal)]:-
                       
                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           The  above decisions are equally applicable on our case also because we were under bona fide belief based on above judgments that no penalty is chargeable on us. Hence it is crystal clear that the show cause notice is not viable and is liable to be quashed.
 
 
Reasoning of the Commissioner (Appeals):-
 
The Commissioner (Appeals) relied on the judgement passed by the Tribunal in case of M/s Sterlite Industries Ltd v/s CCE, Pune as presented by the appellant. The Tribunal in the case held that the credit of inputs used in the manufacture of final product cleared under job work was not hit by Rule 57 of the then Central Excise Rules. It was noticed that goods cleared without payment of duty in terms of Notification No. 214/86-CE though technically exempted goods, but still the same cannot be equated with exempted goods which are finally cleared for home consumption or export in as much as such goods are intermediate goods which are further used by principal manufacturer in the manufacturer of final goods which are cleared on payment of duty. It was also said that the exemption Notification No. 214/86-CE is not exactly an absolute exemption but a procedure to enable the manufacturer to engage in job work for others and supply the goods to such principal manufacturers. Even otherwise if the job worker pays duty on such intermediate goods, the principal manufacturer would be eligible to take Cenvat credit of such duty. Therefore, in view of the above discussions and findings, demands for reversal of cenvat credit of the goods or an amount equal to 10% or 5% of the value of goods cleared under Notification No. 214/86-CE are not sustainable in view of settled law. Hence, the show cause notice issued to the assessee stands non maintainable.
 
 
Decision:-
 
The appeal is allowed.
 
Conclusion:- The analogy drawn from this case is that the provisions of law are to be interpreted harmoniously keeping in mind their legislative intent. Reversal of Cenvat credit on inputs is not warranted when the goods are cleared by job worker that are subsequently cleared by the principal manufacturer on payment of duty on similar footings that intermediate goods are exempt if they are used in the manufacture of final products on which duty is paid. Demanding reversal in the present case would lead to unnecessary complications as the duty paid by the job worker would ultimately be available as credit to the principal manufacturer thereby resulting in futile exercise.

 

******

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com