M/S Felex Industries Ltd vs Cce, Indore

[Arising out of the Order-in-Original No. 36/Commr/CEX/IND/ 2008 dated 29/09/2008 passed by The Commissioner of Central Excise, Indore.]

For Approval and signature :

Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

1. Whether Press Reporters may be allowed to see :

the Order for publication as per Rule 27 of the

CESTAT (Procedure) Rules, 1982?

2. Whether it would be released under Rule 27 of :

the CESTAT (Procedure) Rules, 1982 for

publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair :

copy of the order?

4. Whether order is to be circulated to the :

Department Authorities?

M/s Felex Industries Ltd. Appellant

Versus

CCE, Indore Respondent

Appearance

Shri K.K. Anand, Advocate  for the appellant.

Shri Ranjan Khanna, Authorized Representative (DR)  for the Respondent.

CORAM: Honble Shri Ashok Jindal, Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Order No. 52489/2015 Dated : 04/08/2015

Per. Ashok Jindal :-

The appellant is in appeal against the impugned order.

2. The facts of the case are that the appellant were engaged in manufacturing of polyester chips on job work basis for Flex Industries Ltd., Noida. The appellant were receiving duty paid raw material supplied free of cost by the Noida Unit for use as input in job work materials. The Noida unit availed the credit on the raw materials which was sent to the appellant for job work. After job work, the appellant clearing the said goods on payment of duty to the Noida unit, who further process the job work goods for manufacturing polyester film (the final product) and same was cleared on payment of duty by the utilizing Cenvat credit on the duty paid by them. The sole allegation against the appellant is that the appellant has used raw material and have not taken Cenvat credit of duty paid on raw material, consequently, the amount of Cenvat credit was not included in the assessable value of job work goods, therefore, the appellant has under valued their final product. Consequently, they are required to add the amount of Cenvat credit in the assessable value. A show cause notice was issued, the same was adjudicated and the impugned order was passed by demanding duty alongwith interest and imposing penalty on the appellant. Aggrieved from the said order, the appellant is before us.

3. Heard the parties considered their submissions.

4. In this case the short issue is before us is that when the appellant is a job worker and not availing Cenvat credit on the inputs but clearing the job work goods on payment of duty which were used by the principal manufacturer for further processing and cleared their final product on payment of duty, in those circumstances, whether the Cenvat credit which was not availed by the appellant is required to be added in assessable value or not. The similar issue came up before the Honble Apex Court in the case of International Auto Ltd. vs. CCE, Bihar reported in 2005 (183) E.L.T. 239 (S.C.), wherein it was held by the Honble Apex Court that when the principal manufacturer is paying duty on the final manufactured goods, in that case the job worker is not required to pay duty on job work goods. The case in hand is on better footing to the said case, as in the case in hand the appellant has paid some duty on job work goods. Further we also observed that in the case of CCE, Pune vs. Dai Ichi Karkaria reported in 1999 (112) E.L.T. 353 (S.C.) held that Modvat credit utilized by the assessee would not be included in the assessable value of the final product. We also find that whatever duty has been paid by the appellant same is entitled to Cenvat credit to their sister unit, therefore, it is a revenue neutrality situation.

5. With these observations, we hold that appellant are not required to add the Cenvat credit amount in the assessable value as same has been already taken care of by the principal manufacturer. Therefore, the impugned order is set aside and the appeal is allowed with consequential relief, if any.

(Operative part of the order pronounced in the open court.)

(Ashok Jindal)

Member (Judicial)

(B. Ravichandran)

Member (Technical)

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