2020-VIL-344-CESTAT-DEL-CE

CENTRAL EXCISE CESTAT Cases

Central Excise - Larger Bench reference order - Appellant’s eligibility to Cenvat Credit of input services based on ISD invoices issued by the principal manufacturer in favour of appellant - contract manufacturing in terms of provision of Notification No.36/2001-CE (NT) - Appellant case that appellant-contract manufacturer is deemed manufacturing unit of the principal manufacturer - Confirmation of demand as per Rule 2(m) r/w Rule 7 of CCR, 2004 on the ground that the appellant is not the manufacturing unit of principal – HELD – The input services on which credit was availed is admittedly attributed to the product manufactured on contract basis on prorate basis. In terms of Notification No.36/2001-CE (NT), the excise duty was paid on the transaction value of principal and excise duty was paid on MRP based valuation in terms of Section 4A of the CEA Act, 1944. With these undisputed fact, the substantial requirement for availing Cenvat credit is fulfilled – the contract manufacturing is in terms of Notification No.36/2001-CE (NT) which creates a fiction that appellant unit is of principal for all the procedure under Central Excise, therefore only for Cenvat purpose it cannot be treated differently. Moreover, Rules say that ISD invoice shall be issued by an office to “its manufacturing unit”. By authority of aforesaid notification, the contract manufacturing unit will be deemed to be a unit of principal manufacturer – in the present case, the criteria for allowing the Cenvat credit in respect of input service, have admittedly been fulfilled. Issuing the ISD invoice is only procedural formalities to keep the accounting of input credit correct and straight - though we have given our independent view in the present case but since there is a conflicting judgment, keeping in mind the judicial discipline, this matter needs to be referred to the larger bench - Registry is directed to place this matter before the Hon’ble President of this Tribunal for constituting the Larger Bench

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