2015 (12) TMI 1563 - AT - Central Excise

Cenvat demand and penalty - Rule 15 of CENVAT Credit Rules ,2004 read with Section 11AC of CEA, 1944 - quantity of zinc cleared under Rule 5(a) of CCR, 2004 were not returned after necessary processes at the job workers premises - whether the zinc initially sent for job work against challan Nos. 16 and 19 dated 7th July, 2007 and 9th July, 2007 respectively, were used in the galvanization by the job worker or otherwise. Held that - I have carefully examined the challan No. 12 where under initially 200 pcs. of steel channels, sleepers sent on 20/6/2007 were returned after carrying out the process of galvanization on 31/7/2007 by the said job worker M/s. Standard Galvanizing, to whom the disputed quantity of zinc was also sent against challan No. 16 and 19. Also, on comparing the challan No. 12, 16 and 19, I find that the nature of process mentioned in challan No. 12 was Galvanizing only whereas in Challan Nos. 16 and 19 galvanizing into Steel Channels, Sleepers. Therefore, in my view the zinc that had been sent against Challan No. 16 and 19, after sending the 200 pcs. of steel channels, were exhausted in the process of galvanizing, as is evident from the endorsement recorded in the challan No. 12, while returning the 200 pcs. of steel channels after undertaking the process of galvanization. Therefore, the appellant could establish that the quantity of zinc sent for galvanization were duly exhausted in galvanizing 200 pcs. of steel channels. - Decided in favour of appellant

Summary

Issues:
- Demand of CENVAT Credit availed on zinc not returned after processing within 180 days.
- Appeal against Order-in-Appeal No. 14/HAL/2012 confirming the demand and imposing penalty.
- Dispute regarding whether zinc sent for galvanization was used by the job worker.
- Lack of sufficient evidence establishing the return of zinc cleared for job work.

Analysis:
The appeal was filed against an Order-in-Appeal confirming the demand for CENVAT Credit availed on zinc not returned within 180 days after processing. The appellant, a manufacturer of Railway Track and Round, sent zinc for job work to a job worker, alleging that the zinc was exhausted in the galvanization process and could not be returned. The Ld. Commissioner (Appeals) rejected the appeal due to insufficient evidence of zinc return. The central issue was whether the zinc sent for galvanization was used by the job worker, as claimed by the appellant.

During the proceedings, the appellant's advocate argued that the zinc sent for galvanization was indeed exhausted in the process, as the galvanized steel channels were returned after processing. The Revenue's representative supported the Ld. Commissioner (Appeals)'s findings, emphasizing the lack of evidence regarding zinc return. After hearing both sides and examining the records, the judge concluded that the zinc sent for galvanization was indeed used up in the process, as evidenced by the return of galvanized steel channels and the nature of processes mentioned in the challans.

The judge noted that the zinc sent against specific challans was exhausted in galvanizing the steel channels, as indicated by the return of processed goods and the nature of processes mentioned in the relevant documents. Consequently, the judge set aside the impugned order, allowing the appeal and providing for any consequential relief as per the law. The appeal was thus allowed based on the established exhaustion of the zinc in the galvanization process, overturning the previous decision and confirming the appellant's position.