VALENTINO SYNTEX PVT. LTD. AND Vs. CCE

JUDGEMENT

(1.) THE orders impugned in the captioned appeals affirmed demand of Central Excise Duty and the interest due thereon in respect of clearances of grey fabrics made between April and September 2005. The appellants had cleared grey fabrics without payment of duty for further manufacture into man -made fabrics by job workers.

(2.) THE appellants are registered for manufacture of processed fabrics. They cleared such fabrics on payment of duty. The grey fabrics found to have been cleared without payment of duty, were processed into man -made fabrics by job workers. These were received back by the appellants and cleared on payment of duty after undertaking various processes including export packing. The lower authorities have held the view that grey fabrics themselves were final products of the assessee and should have been cleared from the factory on payment of duty. Only inputs, as such, or partially processed inputs could be sent to a job worker for further processes or completing the manufacturing process. In the instant case, the appellants received duty paid yarn, took credit of duty paid and wove them into grey fabrics. Grey fabrics are the final products of the assessee. No manufacturing process is undertaken on the man -made fabrics received from the job worker. Therefore, the job work procedure envisaged under Rule 4(5)(a) of Cenvat Credit Rules, 2002 (CCR) was not applicable to the movement of grey fabrics to the job worker. Duty demand on grey fabrics is affirmed on the basis that manufacturing processes were carried out on the final product grey fabrics after its manufacture.

(3.) HEARD both sides. We have studied the case records and considered the submissions. Rule 4(5)(a) of CCR is reproduced below: The CENVAT credit shall be allowed even if any inputs or capital goods as such or after being partially processed are sent to a job worker for further processing, testing, repair, re -conditioning or any other purpose, and it is established from the records, challans or memos or any other document produced by the assessee taking the CENVAT credit that the goods are received back in the factory within one hundred and eighty days of their being sent to a job worker and if the inputs or the capital goods are not received back within one hundred eighty days, the manufacturer shall pay an amount equivalent to the CENVAT credit attributable to the inputs or capital goods by debiting the CENVAT credit or otherwise, but the manufacturer can take the CENVAT credit again when the inputs or capital goods are received back in his factory.