Clipped from: https://www.taxscan.in/no-excise-duty-on-goods-manufactured-on-job-work-basis-from-old-and-used-goods-supplied-by-principal-supplier-cestat/175466/?utm_source=izooto&utm_medium=push_notifications&utm_campaign=No%20Excise%20Duty
By Jwala K.P – On May 17, 2022 2:31 pm
The Ahmedabad Bench of Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that no excise duty on goods manufactured on job work basis from old and used goods supplied by the principal supplier.
The appellant, Sanjay Casting, is engaged in manufacturing of C.I. Castings Moulds and is availing the Cenvat Credit of duty paid on the input used in or in relation to the manufacturing of the final products and are also manufacturing of C.I. Moulds on Job Work basis.
The department noticed the use of old and used Moulds for the manufacturing C.I. Moulds. The department issued show cause notices proposing demands on the grounds that Rule 4(5)(a) does not allow the removal of old and used C.I.Moulds. The first appellate authority confirmed the demand and the aggrieved, assessee filed an appeal before the CESTAT.
Mr. Paresh Sheth, counsel appearing on behalf of the appellant submitted that the appellant is manufacturing CI Moulds out of old and used moulds or scrap moulds supplied by the customers by following the procedure prescribed under Rule 4(5)(a) read with Notification No. 214/86. The suppliers were supplying the old and usedmoulds to the appellant for converting into the new mould and returning it back to the principal supplier. The appellant further submitted that the suppliers have filed adeclaration as required under Notification 214/86-CE. This arrangement is permissible under which the job worker is exempted from payment of any excise duty in terms of notification No.214/86-CE.
The Coram of, Mr. Ramesh Nair JM ANS Mr. RAJU TM has observed that the department could not adduce any evidence to substantiate their allegation such as receipt of raw material by the job worker on their end to manufacture of fresh and new C.I. Moulds. The job workerhas done all the transactions as per the challans and for the job work purpose invoices were raised. No invoice was raised in respect of the sale of the goods.
The Tribunal has held that“it is a settled law that manufacturers for the purpose of manufacturing their goods can clear theirown generated scrap to the job worker and get the finished goods manufactured out of it in terms of Notification No.214/86-CE. Therefore, we do not find any reason why the department has proceeded to demand duty from the appellant when all the records and facts as revealed from the investigation clearly show that the appellant has involved in the job work of making C.I. Mould from old and used mould/scrap supplied by their principal manufacturer. Accordingly, we do not hesitate in holding that the demand on this count is not sustainable”.To Read the full text of the Order CLICK HERE