2012 (4) TMI 522 - AT - Central Excise

CENVAT CRedit - whether the latter could claim CENVAT credit on certain capital goods (cylinders used as dies by the assessee s job worker) which were directly dispatched by the supplier to the job worker at the instance of the respondent(assessee) - Held that - condition of return of capital goods within 180 days is not applicable to jigs, fixtures, moulds and dies. This finding is based on para-5 of the condition of allowing CENVAT credit laid down in CBEC s Central Excise Manual. I have also perused para-5 ibid and have found the above finding of the Commissioner(Appeals) to be well founded. It is also noticeable that there is no specific challenge to the above finding of the Commissioner(Appeals), in the present appeal of the Department. As regards the claim of the appellant that physical removal of the capital goods from the respondent s factory to the job worker s premises is a mandatory condition, I find that this claim has not been substantiated. CENVAT credit on the capital goods cannot be denied to the respondent on the ground that the capital goods were not brought into their factory before they were sent to the job worker. The learned Commissioner(Appeals) has found that the respondent had paid processing charges and duty on cylinders and these cylinders were used by the job worker for printing labels for the respondent - Decided against Revenue.

Summary

Issues:
Claim of CENVAT credit on capital goods directly dispatched to job worker, applicability of Rule 4(5a) of CENVAT Credit Rules, 2004, mandatory condition of physical clearance of capital goods, challenge to Commissioner(Appeals) finding, denial of CENVAT credit.

Analysis:
The appeal was filed by the Department against the appellate Commissioner's order which upheld the original authority's decision. The issue revolved around the Department's contention that CENVAT credit could not be claimed by the assessee on certain capital goods (cylinders used as dies) directly dispatched to the job worker by the supplier at the instance of the respondent. The lower authorities ruled in favor of the assessee, stating that the condition of returning capital goods within 180 days did not apply to jigs, fixtures, moulds, and dies, as per CBEC's Central Excise Manual. The Commissioner(Appeals) found this condition to be well-founded, and the Department did not specifically challenge this finding in the appeal.

The appellant argued that the physical removal of capital goods from the respondent's factory to the job worker's premises was a mandatory condition for claiming CENVAT credit. However, this claim was not substantiated. The Tribunal noted that the capital goods were used by the job worker for printing labels for the respondent, and the respondent had paid processing charges and duty on the cylinders. These findings were not challenged. Therefore, the Tribunal held that the denial of CENVAT credit on the ground that the capital goods were not brought into the factory before being sent to the job worker was unfounded. The appeal was deemed to be without merit and dismissed.

In conclusion, the Tribunal upheld the lower authorities' decision in favor of the assessee regarding the claim of CENVAT credit on capital goods directly dispatched to the job worker. The Tribunal found that the condition of returning capital goods within 180 days did not apply to certain types of capital goods, and the mandatory condition of physical clearance from the factory was not substantiated. As a result, the appeal by the Department was dismissed.