JBF INDUSTRIES Vs. CCE & ST, VAPI

JUDGEMENT

(1.) THIS appeal has been filed by the appellant against Order in Original No. 23/DEM/VAPI/2011 dated 28/09/2011, passed by the Commissioner, Vapi and issued on 19/10/2011 Under this order adjudicating authority has disallowed CENVAT Credit of Rs. 71,80,949/ -, along with charging interest and imposing penalty of equivalent amount under Rule 15 of the CENVAT Credit Rules, 2004 read with Section 78 of the Finance Act, 1994. The factory of the appellant, situated at Sarigam, District Valsad (Gujrat), is engaged in the manufacture of Polyester Chips, Lump Waste, and Polymer Waste falling under Chapter 39 of the Central Excise Tariff Act, 1985 and availing the facility of CENVAT Credit on inputs, capital goods and input services under the provisions of the CENVAT Credit Rules, 2004. Apart from manufacturing their own Polyester Chips, the appellant also manufactured Polyester Chips on job work basis out of raw materials received from their own factory, located at Athola, Silvasa and sent back the same to their Athola factory without payment of central excise duty in terms of Notfn. No. 214/86 -CE dated 25.03.1986, which exempts the goods manufactured in a factory on job work basis. The Department entertained a view that the CENVAT Credit of service tax paid on input services, used by the appellant in the manufacture of goods on job work basis, exempted under Notf. No. 214/86 CE, was not admissible to the appellant in terms of the provisions of Rule 6 (1) of the CENVAT Credit Rules, 2004. Department also viewed that the appellant had rendered Business Auxiliary Service Exempt under Notf. No. 8/2005 ST dated 01.03.2005 to its own factory M/s. JBF Industries Limited, Athola inasmuch as the appellant undertook production or processing of goods (working upon raw material supplied by the client) on behalf of the client as mentioned in sub -clause (v) of clause (19) of Section 65 of the Finance Act, 1994, and hence CENVAT Credit of service tax paid on input services used in providing exempted Business Auxiliary Service was not admissible to them in terms of the provisions of Rule 6 (1) of the CENVAT Credit Rules, 2004.

(2.) SHRI W Christian (Adv.) appearing on behalf of the appellant argued that as per ratio laid down in Sterlite Industries (I) Limited Vs. C.C.E. Pune (2005 (68) RLT (CESTAT -LB)), also upheld by the Hon'ble Bombay High Court (2009 (244) ELT A -89 (Bom.)), the CENVAT Credit with respect to input services availed by the appellant cannot be denied. He also relied upon the following case laws in support of his argument that CENVAT Credit of input services is also admissible to the appellant even if goods are cleared under exemption Notf. No. 214/86 CE dated 25.03.1986.

(3.) WE have considered the submissions made at length by both sides and perused the records.