2015 (1) TMI 26 - AT - Central Excise

Cenvat credit - SSI Exemption - Payment of duty on scrap - Held that - CBEC Circular has clarified that input contained in any waste and scrap generated during the course of manufacturing of final product is admissible. Therefore, it is immaterial if the scrap has been generated at the end of job worker who is availing SSI exemption on the scrap. In these circumstances, the appellant is entitled for Cenvat credit on inputs which contained in waste and scrap generated at the end of job worker. With these observations, I do not find any merits in the impugned order therefore, the same is set aside. - Decided in favour of assessee.

Summary

Issues:
Appeal against duty and interest confirmation based on denial of Cenvat credit on scrap generated by job worker availing SSI exemption.

Analysis:
The appellant, a manufacturer of motor vehicles and parts, sent inputs to a job worker resulting in scrap generation at the job worker's end. Cenvat credit on input in the scrap was denied due to the job worker's SSI exemption. The Commissioner (Appeals) dropped the penalty citing no suppression. The appellant appealed the duty and interest confirmation.

Upon hearing both sides, the Tribunal considered the appeal for final disposal. The appellant cited CBEC Circular and a Tribunal decision stating admissibility of Cenvat credit on input in waste or scrap. The AR supported the impugned order.

The Tribunal noted the CBEC Circular allowing Cenvat credit on input in waste or scrap during final product manufacturing, irrespective of SSI exemption by the job worker. Consequently, the Tribunal found the appellant entitled to Cenvat credit on inputs within the scrap generated by the job worker. The impugned order was set aside, and the appeal was allowed with consequential relief. The stay application was disposed of accordingly.