2014 (3) TMI 711 - AT - Central Excise

Reversal of CENVAT Credit - Destruction of goods - Held that - inputs were admittedly issued from the raw materials stock and were destroyed when the same were in the blow room. As such it can be held that the inputs were under process. Further the appellant have also claimed the expenses towards dying and process purchases thus lending support to their stand. In view of the above, there is no legal obligation on the part of the appellant to reverse the Cenvat credit so availed by them - Decided in favour of assessee.

Summary

Issues:
1. Whether the appellant is entitled to Cenvat credit for destroyed inputs.
2. Validity of the order confirming Cenvat credit demand, interest, and penalty.

Analysis:
1. The appellant, engaged in manufacturing manmade yarn, availed Cenvat credit on inputs destroyed in fire accidents. The Jurisdictional Additional Commissioner confirmed a Cenvat credit demand of Rs. 5,09,785/-, along with interest and penalty, which was upheld by the Commissioner (Appeals). The appellant contended that the destroyed fiber was in process, citing relevant tribunal judgments. The Departmental Representative argued that the destroyed inputs were not in process and relied on other tribunal judgments. The Tribunal analyzed whether the destroyed inputs were in process or as such, based on factual examination.

2. The Superintendent's report clarified that the destroyed fiber was issued for processing but no process was undertaken by the appellant in the blow room. The report indicated that the fiber burnt in the fire was in the nature of input as such, as no processing was done by the appellant. The Tribunal noted that the inputs were destroyed in the blow room while under process, supported by the appellant's claim for dying and processing charges. Consequently, the Tribunal held that the appellant was not obligated to reverse the Cenvat credit availed, setting aside the impugned order and granting relief to the appellant.