CA Bimal Jain
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:
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.