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2013 (2) TMI 337 - AT - Central ExciseCENVAT Credit availed on goods which were short received from the job worker - Short payment of Excise Duty - Invoking extended period of limitation - Held that - There is no dispute regarding job worker is engaged in melting of copper cathode and after melting such copper cathode, the process of manufacturing includes making of copper strips. Admittedly, there is a loss which is approx. 5% of the quantity of goods sent to job workers. Both the lower authorities have not accepted this fact and held that the provisions of Rule of 4(5)(a) of CENVAT Credit Rules envisages the receipt of entire goods back from the job workers. The said findings are in consonance with the law as has been laid down in Bharat Radiators Ltd (2002 (3) TMI 685 - CEGAT, MUMBAI), Vema Metal & Conductors Ltd (2007 (3) TMI 444 - CESTAT, NEW DELHI), Tata Motors Ltd (2010 (10) TMI 458 - CESTAT, KOLKATA). I find that the judgment of the Tribunal in the case of Tata Motors Ltd (supra) wherein held that the credit cannot be denied in respect of the process loss at the hand of job worker. In view of the above we find as the Revenue has not denied the fact that the quantity which was found short on account of processing hence the demand is not sustainable hence set aside. Also see CMC (India) 2010 (1) TMI 485 - GUJARAT HIGH COURT - in favour of assessee.
Issues:
Reversal of CENVAT Credit on inputs sent for job work resulting in short payment of duty. Analysis: The case involves the issue of reversal of CENVAT Credit on inputs sent for job work, leading to a shortfall in the quantity of goods received back, causing a duty payment discrepancy. The appellants, engaged in manufacturing excisable goods, sent copper goods for job work to a specific job worker, experiencing a 5% melting loss during the process. A show cause notice was issued for the recovery of excise duty amounting to Rs. 8,91,653/- for the years 2007-2008 and 2008-2009, along with interest and penalty under relevant sections of the Central Excise Act, 1944. The adjudicating authority confirmed the demand, interest, and penalty, which was upheld by the first appellate authority. The appellant contended that there was no dispute about the loss during the job worker's process, citing precedents like Bharat Radiators Ltd, Vema Metal & Conductors Ltd, and Tata Motors Ltd, where demands for CENVAT Credit due to process loss at the job worker's end were rejected. The appellate tribunal analyzed the facts, noting the loss of approximately 5% in the quantity of goods sent for job work. Referring to previous tribunal decisions, including a Division Bench judgment in Tata Motors Ltd, the tribunal found that the demand for CENVAT Credit reversal due to process loss was unsustainable. Additionally, the tribunal referenced a judgment by the Hon'ble High Court of Gujarat in the case of CMC (India) to support the conclusion that no substantial question of law arose in the present case. Considering the judicial precedents and the factual findings, the tribunal set aside the impugned order, allowing the appeal with consequential relief to the appellant. The judgment emphasized that the demand for CENVAT Credit reversal based on the process loss at the job worker's end was not tenable, aligning with established legal principles and precedents. In conclusion, the tribunal's decision focused on the correct interpretation of CENVAT Credit rules in cases of process loss during job work, ensuring that demands for credit reversal were in line with legal precedents and factual considerations. The judgment provided clarity on the treatment of process losses in excisable goods manufacturing, offering relief to the appellant based on established legal principles and judicial findings.
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