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
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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 of Thermax Ltd. Vs. Commissioner of Central Excise, Vadodara-I [(2014) 51 taxmann.com 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 preferred an 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:
- Bharat Heavy Electricals Ltd. Vs. CCE & ST[2014 (300) ELT (Trib. - Delhi)];
- Ujagar Prints Vs. Union of India[1989 (39) E.L.T. 493 (S.C.)]
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Bimal Jain
FCA, FCS, LLB, B.Com (Hons)
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