By TIOL News Service

MUMBAI, NOV 09, 2015: THE appellant imported ‘fitment' and availed CENVAT credit of CVD paid thereon. Later, the ‘fitment' was sent to their group company NSSL under cover of challan issued under Rule 4(5)(a) of CCR, 2004 for the purpose of job work i.e fitting into cylinder heads supplied by NSSL.

Thereafter, the finished goods i.e. cylinder head duly fitted with fitment were cleared from the premises of NSSL for export on behalf of the appellant.

A bit flummoxed with this procedure adopted, the department viewed that the CENVAT Credit amounting to Rs.15,72,876/- availed on the imported fitment is not admissible as the appellant cannot be construed as a manufacturer in the present transaction (and that NSSL is the actual manufacturer).

The SCN culminated in an adjudication order confirming the demand and imposition of penalty and interest.

The Commissioner(A) passed a somewhat sketchy order which reads -

(1) The demand in respect of fitments related to goods exported from premises of M/s. NSSL is upheld .

(2) The demand to be decided afresh with respect to the fitments related to the goods exported from the premises of the appellant .

(3) The penalty aspect to be decided afresh depending upon the total liability of the appellant.

(4) For the purpose of 2 & 3 above, the case is remanded to the original authority.

(5) The order-in-original stands modified to the above extent.

Before the CESTAT against this order, the appellant justified their taking the credit by placing reliance on the following decisions viz. Amul Industries P. Ltd. 2006-TIOL-1483-CESTAT-MUM, Vikram Cement 2006-TIOL-150-SC-CX, Indian Organic Chemicals Ltd. 2005-TIOL-801-CESTAT-MAD, Glass and Ceramic Decorators 2014-TIOL-2064-CESTAT-MUM.

The AR reiterated the departmental stand.

The Bench observed -

+ It is observed that even though partly goods were manufactured by the job worker but part of the process i.e. fitting of fitment supplied by the appellant was carried out by the job worker on behalf of the appellant and thereafter the final product has been completed, the said final product since then exported on behalf of the appellant only, therefore, even though part manufacturing carried out by job worker on their own since entire final product is complete on behalf of the appellant and said final product has been exported on behalf of the appellant they are legally entitled for Cenvat Credit in respect of fitment.

+ From the records, it is observed that the supply of fitment by the appellant under Rule 4(5)(a), use of said fitment for export goods and the export of the final product though from the premises of the job worker ie M/s. NSSL is not under dispute, on the basis of invoices, ARE 1 and other export documents, the Cenvat Credit in respect of fitment used in the export goods cannot be denied.

+ It is also observed that Commissioner (A) himself in the impugned order made distinction that in respect of some items, under the same nature of transaction in respect of goods exported from the premises of the appellant was remanded to the original authority and the matter related to the goods exported through premises of the job worker, Cenvat Credit was denied.

+ This shows that Commissioner(A) merely on the basis that goods have been cleared for export from the premises of the job worker concluded that credit is not admissible but given different treatment to goods cleared from the premises of the appellant.

+ In my view premises from where the goods have been exported is not much of relevance, it is export irrespective of locations, either from the appellants premises or from the job workers premises (M/s. NSSL) the Cenvat Credit should be allowed on input used in the export goods.

Holding that the appellant was entitled for CENVAT Credit in respect of fitment used in the final product by the job worker M/s. NSSL and from whose premises the goods were cleared for export, the order was modified accordingly and the appeal was allowed.

(See 2015-TIOL-2388-CESTAT-MUM )