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CX - Decision of LB in case of Sterlite Industries Ltd relies on spirit of MODVAT Rules and no specific rules - Ratio is equally applicable to CCR, 2004 - Inputs used for job work are entitled to CENVAT credit: CESTAT

By TIOL News Service

MUMBAI, FEB 22, 2016: THE appellant is manufacturing coloured paper and paperboard and clearing the same on payment of duty. They are also undertaking the job-work of calendaring, coating and/or colouring of paper for other units by using inputs like pigment, dyes, chemicals etc. on which they were availing CENVAT Credit. The job worked goods were cleared to the principal manufacturer by availing exemption under Notification No. 214/86-CE dated 25.3.1986.

Revenue disputed the CENVAT Credit taken on inputs used in respect of job-worked goods cleared under full exemption, by invoking Rule 6 of the CCR, 2004.

As the lower authorities confirmed the demand, the appellant is before the CESTAT.

The appellant submitted that the issue has been finally decided by Larger Bench of the Tribunal in the case of Sterlite Industries (I) Ltd. 2005-TIOL-305-CESTAT-MUM-LB and which has been upheld by Bombay High Court 2009 (244) ELT A89 (Bom).

The AR took the following stand - that the decision in case of Sterlite Industries was given while interpreting the MODVAT Rules, whereas the present dispute pertains to Cenvat Credit Rules.

The Bench extracted the LB decision in case of Sterlite Industries Ltd. (supra) wherein credit was allowed even in respect of inputs used for job worked goods cleared under Notification 214/86-CE and further observed:

"… The said decision of the Tribunal has been upheld by Hon'ble Bombay High Court (cited supra). While the decision in case of Sterlite Industries Ltd. has been given in respect of disputes which had arisen during the MODVAT regime, the same argument are equally applicable to the Cenvat Credit Rules, 2004. It is seen that the decision of the Tribunal in the case of Sterlite Industries Ltd. (supra) relies on the spirit of the MODVAT Rules and no specific rules. The ratio of the said judgment is equally applicable to Cenvat Credit Rules, 2004."

Noting that the issue involved is squarely covered by the LB decision, the orders of the lower authority was set aside and the appeals were allowed.

In passing: Also see 2016-TIOL-400-CESTAT-MUM.

(See 2016-TIOL-477-CESTAT-MUM)


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