Order Date – 07 June 2023

Parties: M/s. Rama Ferro Alloys & Finance Private Limited Vs Commissioner of CGST & CX, Kolkata North Commissionerate

Facts – 

• 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.
• 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 & 4 of the CENVAT Credit Rules, 2004 inasmuch as they have wrongly availed the CENVAT Credit 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.

Issue – 

• Whether the the Appellant is entitled to credit of duty paid on inputs received under Rule 4(5)(a) of the CENVAT Credit Rules, 2004?

Order – 

• The Tribunal observed 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. But the final products which are exported under the coverage of B-17 Bond do not fall in either exempted or nil rate of duty category. Therefore, no duty reversal/payment arises in the facts of the present case.
• This issue has been considered at length by the Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd. vs. CCE, Pune [2005 (183) ELT 353 (Tri.-LB)] in the context of old provisions which were later upheld by the Hon’ble Bombay High Court. No contrary decision has been placed by the Revenue. The proviso to Rule 4(5)(a) is pari materia with the provisions discussed in the said judgement.
• Hence, the ratio laid down is squarely applicable to the facts of the present case. The ratio laid down by the Tribunal is squarely applicable to the facts of the present case even if the goods were ultimately exported when one takes into consideration the provisions contained in Rule 6(6) of CENVAT Credit Rules, 2004.
• Thus, it was held 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.