2007 (2) TMI 528 - AT - Central Excise

Summary

Issues: Alleged contravention of Cenvat Credit Rules regarding availing credit on capital goods sent to job workers directly.

Analysis:
1. The show cause notice alleged that the appellant availed Cenvat credit on capital goods based on an invoice not showing the appellant as the consignee.
2. The appellants contended that the goods were purchased by them and delivered to job workers for processing, then received back at their factory under the job workers' invoice where the appellant's name was mentioned as the buyer.
3. The adjudicating authority dropped the proceedings after examining documents and citing case laws. However, the Commissioner (Appeals) held that credit on capital goods sent directly to job workers cannot be availed.
4. The appellant argued that they complied with Rule 4(5)(a) of the Cenvat Credit Rules, allowing credit as the goods were used in the factory for processing excisable goods.
5. The Department contended that there is no provision to deliver capital goods directly to job workers under the Cenvat Scheme, supporting the Commissioner (Appeals)' decision.
6. The Tribunal found that the goods were received back at the factory and used for processing excisable goods, meeting the requirements of Rule 4(5)(a). The Commissioner (Appeals) misinterpreted the rules, and the adjudicating authority's observations were upheld.
7. Consequently, the impugned order was set aside, and the appeal was allowed with consequential reliefs.