CA Bimal Jain

CA Bimal JainCommissioner of Central Excise, Chennai-III Commissionerate Vs. Sundaram Auto Components Ltd. [2015 (62) taxmann.com 242 (Madras)]

The Department has denied credit of duty paid by job-worker to Sundaram Auto Components Ltd., principal manufacturer (“the Respondent”) on the ground that the job-worker had paid duty even when he was not required to pay in terms of Notification No. 214/86-CE dated March 25, 1986. Thus, the Respondent has availed double benefits by claiming credit of duty paid to supplier of inputs & duty paid and collected by job-worker.

The Hon’ble High Court of Madras relying upon the following judgments:

  • International Auto Ltd. Vs. Commissioner [2005 (183) ELT 239 (SC)];
  • CCE Vs. Kohinoor Printers (P.) Ltd. [2008 taxmann.com 911 (Chennai – CESTAT)];
  • CCE&C Vs. Narmada Chematur Pharmaceuticals Ltd. [2005 taxmann.com 484 (SC)]

held that credit of duty paid by job-worker can be availed by the principal manufacturer, even if job-worker forgoes exemption and pay duty on semi-processed goods returned to the principal-manufacturer. It was further held that the Respondent did not claim credit twice as it only claimed credit of (a) duty paid to supplier of inputs; and (b) duty paid and collected by job-worker, which, even according to the Department, was not payable by job-worker. Since duty was paid by the Respondent both times, Cenvat credit was available and same cannot be construed as double benefit by applying theory of unjust enrichment.

(Author can be reached at Email: bimaljain@hotmail.com)

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