2005 (10) TMI 393 - AT - Central Excise

Summary

Issues:
Whether a manufacturer can avail Cenvat credit based on their own invoice for duty paid on inputs sent for processing by a job worker.

Analysis:
The case involved a dispute where the respondents, manufacturers of cotton and polyester yarns, sent consignments of cotton yarn for mercerization to a job worker and claimed Cenvat credit on the duty paid for the inputs based on their own invoices. The department objected to this, arguing that the manufacturer could not avail Cenvat credit on the basis of their own invoices. The original authority upheld the objection, but the first appellate authority ruled in favor of the respondents, leading to the Revenue's appeal.

Upon examination, the crucial issue was whether a manufacturer could claim Cenvat credit for duty paid on inputs using their own invoice when sending the inputs for processing by a job worker and subsequently receiving the processed inputs back for further processing. The department's objection solely focused on the use of the manufacturer's own invoice as the duty-paying document, without disputing the utilization of the inputs or duty payment during the initial clearance for processing. The judgment emphasized that if the inputs had been irreversibly cleared to a customer, the customer could have claimed Cenvat credit based on the manufacturer's invoice, highlighting the inconsistency in the department's stance.

The tribunal concluded that in the given circumstances, where the manufacturer had paid duty on the inputs sent for processing and received them back for further manufacturing, the manufacturer's own invoice could be considered a valid duty-paying document for Cenvat credit purposes. The judgment highlighted the principle of avoiding double standards and upheld the decision of the first appellate authority, rejecting the Revenue's appeal. The ruling clarified that the manufacturer's use of their own invoice to avail Cenvat credit on duty-paid inputs was permissible in this case, emphasizing the validity of such documents for credit purposes.

In summary, the judgment addressed the issue of Cenvat credit eligibility based on a manufacturer's own invoice for duty paid on inputs sent for processing. It emphasized the validity of the manufacturer's invoices as duty-paying documents in specific scenarios where inputs were processed by a job worker and subsequently used for further manufacturing. The decision highlighted consistency in treating duty-paying documents and upheld the manufacturer's right to avail Cenvat credit in the given circumstances, ultimately rejecting the Revenue's appeal.