2005 (1) TMI 565 - AT - Central Excise

Summary

Issues:
- Entitlement to take credit twice on the same material.
- Denial of input credit to the manufacturer.
- Duty demand against the appellants.

Analysis:

1. Entitlement to take credit twice on the same material:
The case involved the appellants clearing inputs to their job worker without payment of duty, who then paid full duty on the processed goods and returned them to the appellants. The appellants took credit of duty paid on the processed materials, which were used in manufacturing finished goods. The duty demand was raised on the grounds of not being entitled to take credit twice on the same material. However, the Tribunal found that the rules provided options for payment of duty on inputs, and the job worker had paid duty on processed goods. The Tribunal cited a previous decision stating that duty credit cannot be denied in such cases where the job worker pays duty on intermediate components.

2. Denial of input credit to the manufacturer:
Upon careful consideration of the case records, the Tribunal noted that the job worker had received the input duty-free and paid full duty on the processed goods. This resulted in the job worker bearing more duty. However, the total duty payable on finished goods, minus the credit of duty paid on inputs and processed goods, had reached the Government revenue. The Tribunal emphasized that there was no evidence of loss to the Government revenue due to the specific clearance of inputs without duty payment and processed goods with duty payment. The Tribunal's decision supported the appellants' case that duty credit should not be denied when the job worker pays duty on intermediate components.

3. Duty demand against the appellants:
Based on the above findings, the Tribunal concluded that the duty demand against the appellants was not sustainable. Consequently, the Tribunal set aside the lower authorities' order, providing a favorable outcome for the appellant by allowing the appeal.

In summary, the Tribunal ruled in favor of the appellant, emphasizing that duty credit cannot be denied when the job worker pays duty on processed goods, even if the inputs were initially cleared without duty payment. The decision highlighted the importance of following the rules and options provided for duty payment, ensuring that the Government revenue is not compromised.