2011 (7) TMI 243 - AT - Central Excise

Cenvat credit - Material send back for reprocessing and received back the material after reprocessing - The credit taken on 1.9.05 stands reversed on 2.9.05 when the goods were returned for processing - The credit was taken only on 3.11.05 after receipt of the processed goods and only the said credit has been utilised - The earlier credit taken on 1.9.05 having been reversed on 2.9.05, there is no question of taking credit for the second time - The denial of credit holding that the goods received on 3.11.05 may not be the same as goods cleared by the appellants on 2.9.05 is not justified - Decided in favour of assessee. Notional credit on the wastage of yarn - job work - This credit has been denied on the ground that so called waste as claimed by them has occurred during the process of weaving and waste has not been received by the appellants and there is no documents justifying the credit taken on the waste - The denial of credit and consequent demand along with interest is, therefore, justified.

Summary

Issues:
1. Appellants received consignments of yarn, reversed credit, and reprocessed goods.
2. Appellants claimed Cenvat credit on yarn waste during job work.

Analysis:
1. The first issue involves the receipt of yarn consignments, reversal of credit, and reprocessing. The appellants received three consignments of yarn, reversed the credit on 2.9.05, and claimed credit again on 3.11.05 after reprocessing. The original authority doubted the goods received back on 3.11.05, leading to credit denial upheld by the Commissioner (Appeals). The tribunal found the denial unjustified, emphasizing the reversal of credit on 2.9.05 and no reason to doubt the goods' authenticity post-reprocessing. Hence, the denial of credit on this issue was overturned.

2. The second issue pertains to Cenvat credit claimed on yarn waste during job work. The merchant exporter directly sent yarn to the weaver for fabric weaving, and the appellants issued job work challans. The appellants claimed credit on the yarn waste and notional credit on the waste at the weaver's premises. However, this notional credit was denied due to lack of evidence justifying the claim. The tribunal concurred with the denial, stating there was no basis for granting notional credit on the waste. Consequently, the denial of credit and the resulting demand with interest were deemed justified.

In conclusion, the tribunal disposed of the appeal, overturning the denial of credit on the first issue while upholding the denial of notional credit on yarn waste during job work.