2015 (8) TMI 1314 - AT - Central Excise

Cenvat demand - appellant removed certain capital goods outside their factory premises for carrying out job work - job work goods not received after processing within a period of 180 days under rule 4 (5) (a) of the Cenvat Credit Rules 2004 - Held that - in view of the statutory provisions as contemplated in Rule 4(5)(a) the respondent is required to reverse the cenvat credit. The impugned order dropping adjudged demand is not in conformity with the said statutory provisions and as such the same is liable to be set aside. Period of limitation - issued after a period of one year from the date of knowledge regarding sending of capital goods to the job worker - Held that - the Commissioner (Appeals) in the impugned order has not considered the limitation aspect and allowed the appeal in favour of the respondent only on merits. Since the limitation aspect has not been dealt with by the Commissioner (Appeals) and the respondent has not filed any cross objection as per the requirement of section 35B(4) of the Central Excise Act 1944 the matter should be remanded to the Commissioner (Appeals) for considering the limitation aspect involved in the present case. - Appeal allowed by way of remand

Summary

Issues:
1. Cenvat credit reversal for capital goods not returned within 180 days.
2. Bar on limitation of time for show cause proceedings.

Analysis:
1. The case involved the appellant availing cenvat credit on inputs and capital goods used in the manufacture of final products. The appellant removed certain capital goods for job work but did not receive them back within 180 days as required by Rule 4 (5) (a) of the Cenvat Credit Rules, 2004. The Department initiated proceedings, confirming a cenvat demand, interest, and penalty. The Commissioner (Appeals) set aside the demand citing revenue neutrality and the availability of capital goods at the job worker's premises, a group concern of the appellant.

2. The Revenue appellant argued that the appellant failed to fulfill the condition of Rule 4 (5) (a) by not receiving the capital goods back within 180 days, necessitating the reversal of cenvat credit. The respondent's advocate contended that the show cause proceedings were time-barred as the Department was aware of the goods sent for job work since March 1998, but the notice was issued in May 2011, beyond the one-year limitation period.

3. The Tribunal noted that Rule 4 (5) (a) allows removal of goods for job work with the requirement to return them within 180 days; failure necessitates cenvat credit reversal. As the goods were not returned within the stipulated period, the respondent was directed to reverse the credit. However, the Tribunal agreed with the respondent's argument on the limitation aspect, stating that the Commissioner (Appeals) did not address it. The matter was remanded to the Commissioner for examination of the limitation issue, and the appeal was allowed by remand for further consideration.