2013 (6) TMI 580 - AT - Central Excise

Modvat / Cenvat Credit - Job Work - Direct sending of the inputs to the job-worker from the factory of the input manufacturer, or from the port of entry - Held that - as soon as the assessee received the duty paying documents in respect of inputs which were sent directly to the job-worker, the assessee took the credit of goods in RG23 Part I and accounted for them. However, as envisaged under Rule 57G, the assessee did not take credit of duty paid since credit could be taken only after the inputs were received in the factory. CBEC Circular No. 265/99/96-CX dated 12.11.1996, wherein it is clarified that the credit can be taken in respect of inputs sent directly to the job-worker only when the same are received from the job-worker. - Credit allowed - decided in favor of assessee.

Summary

Issues:
- Availment of MODVAT credit for inputs sent directly to job-worker's factory under Rule 57 F(3) of Central Excise Rules
- Interpretation of Rule 57G(5) regarding time limits for credit availment
- Applicability of CBEC Circular No. 265/99/96-CX
- Conflict between Rule 57G(5) and CBEC Circular

Analysis:
1. The appellant, engaged in manufacturing pharmaceutical products, avails MODVAT credit for duty paid on inputs under Rule 57A. Inputs are sent to job-worker's factory directly, and credit is taken in RG23A Part I. MODVAT credit in RG23A Part II is taken only upon physically receiving processed inputs in the factory. Show-cause notice denied credit amounting to Rs. 11,60,818/- with interest for inputs sent directly to job-worker without receiving them in the factory.

2. The appellant argues that Rule 57G(5) time limit applies to inputs received in the factory, not those sent directly to job-worker. Credit was taken in RG23 Part I within six months of issue of duty paying documents. Cites relevant decisions to support the claim that credit obligation was fulfilled. Also relies on CBEC Circular No. 265/99/96-CX allowing credit for inputs sent directly to job-worker upon receipt.

3. The Authorized Representative contends that Rule 57G(5) time limit of nine months applies, considering inputs sent to job-worker. Argues that Circular does not override Rule 57G(5) provisions. Asserts appellant is ineligible for credit under Rule 57G(5).

4. The Tribunal notes that appellant took credit in RG23 Part I upon receiving duty paying documents for inputs sent directly to job-worker. Rule 57G obligation deemed fulfilled as per previous decisions and Circular interpretation. No contrary view from higher judicial forums presented. Tribunal allows appeal, citing consistency with previous decisions relied upon by the appellant.

5. The judgment emphasizes that as per Rule 57G, credit could only be taken after physically receiving inputs in the factory. Previous decisions and Circular support appellant's position. No need for detailed discussion as existing precedents are followed. Appeal allowed with consequential relief to the appellant based on Tribunal's decision and previous rulings.

Conclusion:
The judgment clarifies the process of availing MODVAT credit for inputs sent directly to a job-worker's factory under Rule 57 F(3) of the Central Excise Rules. It also interprets the applicability of Rule 57G(5) time limits and the relevance of CBEC Circular No. 265/99/96-CX in such cases. The decision aligns with previous rulings and allows the appeal, providing relief to the appellant based on established legal interpretations and precedents.