2011 (8) TMI 599 - AT - Central Excise

Cenvat - clearance of inputs by job worker without reversing the credit as the final duty is paid by the principal manufacturer - Revenue treated it as deemed removal of input as such - Held That - In view of Mahadev Industries Ltd. Vs.CCE (1999 (6) TMI 202 - CEGAT, MADRAS) & BPL Electronics Ltd. Vs. CCE (1994 (3) TMI 190 - CEGAT, NEW DELHI),demand is not payable on inputs or capital goods due to change in ownership when the same are not removed from the factory of production. Appellant entitle to Credit. Proof of existence of Inputs in stock - non production of stock register - Appellant to show from the records that factually the inputs were in their stock on 10.06.2001. Merely the annexure to the sale invoices mentioning the item will not prove the case of Appellant in this regard.

Summary

Issues:
- Appeal against demand and penalty by M/s.H.V.Axles Ltd. and Divisional Manager (Finance)
- Appeal against demand and penalty by M/s.H.V.Transmissions Ltd. and Divisional Manager (Finance)
- Confirmation of demand due to non-reversal of credit on inputs sold to M/s.Tata Motors Ltd.
- Interpretation of job-work agreement regarding credit availed on inputs
- Dispute on ownership relevance for credit availed under CENVAT Credit Rules
- Submissions on demand sustainability based on non-removal of inputs from the factory
- Lack of stock register evidence during adjudication proceedings
- Entitlement of credit for inputs not physically removed from the factory
- Quantification of credit available for appellants

Analysis:
The judgment involves multiple appeals against demands and penalties imposed on two companies, M/s.H.V.Axles Ltd. and M/s.H.V.Transmissions Ltd., along with their respective Divisional Managers (Finance). The core issue revolves around the confirmation of the demand due to the failure of the appellants to reverse credit on inputs sold to M/s.Tata Motors Ltd. The appellants argued that as job-workers, they were entitled to credit on inputs supplied by the principal manufacturer, TML, as they were discharging duty on the finished goods. They contended that the demand was unsustainable as the inputs were not physically removed from the factory and were used in manufacturing goods cleared on payment of duty.

The appellants relied on legal provisions and past judgments to support their claim for credit on inputs not removed from the factory. The Revenue, on the other hand, argued that the appellants were not entitled to credit as the inputs were sold to TML under commercial invoices. The lack of stock register evidence during adjudication raised doubts about the appellants' possession of the inputs on the relevant date. The tribunal noted that the appellants were formed as subsidiaries of TML and entered into a job-work agreement, selling inputs to TML without reversing credit.

The tribunal referred to the Hon'ble Bombay High Court's decision and tribunal precedents to establish that the appellants were entitled to credit on inputs retained as job-workers. However, the lack of concrete evidence regarding the availability of inputs in the factory on the specified date led to a remand for quantifying the credit available to the appellants. The tribunal emphasized the importance of producing evidence to support claims regarding the entitlement of credit on inputs used in manufacturing goods cleared to TML. Ultimately, the appeals were disposed of by way of remand for further consideration on the quantification of credit.