2011 (6) TMI 590 - AT - Central Excise

CENVAT credit - appellants were the job-worker - appellant received certain machineries, moulds and tools fixtures from L&T on which duty has been paid by L&T. On receipt of those capital goods the appellant took credit of the duty paid on those capital goods and informed the department - show-cause notice was issued on 02/08/2005 alleging that the appellant have suppressed the facts of CENVAT credit from the department on those capital goods which they were not entitled to - Held that - in the case of Hongo India (P) Ltd. (2003 - TMI - 108818 - CEGAT, NEW DELHI - Central Excise) , in case the buyer supplying the capital goods to the assessee for manufacture of certain goods on job-work basis on payment of appropriate duty, under a cover of duty paying documents, the assessee is entitled to take the credit of the duty paid on capital goods by the buyer, order is set aside and the appeal is allowed

Summary

Issues: Appeal against denial of CENVAT credit on capital goods; Allegation of suppression of facts; Entitlement to CENVAT credit on capital goods received from principal manufacturer.

Analysis:
- The appellant filed an appeal against the order denying CENVAT credit on capital goods against duty paying documents. The appellant, a job-worker of L&T, received machineries, moulds, and tools from L&T between July 2000 to March 2002 on which duty had been paid by L&T. The appellant informed the department about availing CENVAT credit on these capital goods on 18/12/2000. Despite queries and a show-cause notice alleging suppression issued in 2005, the adjudicating authority dropped the notice on limitation grounds. However, the Commissioner (Appeals) set aside the order and denied the CENVAT credit. The appellant appealed to the Tribunal challenging this decision.

- The appellant's counsel argued that they had informed the department about availing CENVAT credit and responded to queries in February 2001. The counsel cited a previous Tribunal case to support the appellant's entitlement to the credit. The Departmental Representative contended that since the appellant did not have proper documents for the capital goods, they were not eligible for the credit.

- The Tribunal examined the case and noted that the appellant had informed the department in 2000 about taking credit on the capital goods supplied by the principal manufacturer for job-work activities. Therefore, the show-cause notice in 2005 alleging suppression was deemed unsustainable due to the extended limitation period. Additionally, on merits, the Tribunal referred to the Hongo India case, stating that if a buyer supplies capital goods to the assessee for manufacturing goods on a job-work basis with appropriate duty payment, the assessee is entitled to take credit on the duty paid for the capital goods. Consequently, the Tribunal set aside the impugned order and allowed the appeal.