2015 (1) TMI 497 - AT - Central Excise

Denial of CENVAT Credit - Chemicals supplied to job worker by appellant for use in processing of semi-finished parts - Job worker utilising excess CENVATTED inputs than the norms fixed for processing - Held that - Appellant is entitled to take Cenvat credit is not required to reverse any Cenvat credit. In these circumstances, following the precedent decision of this Tribunal in the case of Bajaj Electrical Ltd. (2009 (6) TMI 781 - CESTAT, MUMBAI), I hold that the appellant is entitled to take Cenvat credit and are not required to reverse Cenvat credit on account of excess consumption of input - Decided in favour of assessee.

Summary

Issues:
Appeal against denial of Cenvat credit of inputs, interest, and penalty imposition.

Analysis:
The appellant, a manufacturer of motor vehicle parts, appealed against the denial of Cenvat credit of inputs, interest, and the imposition of a penalty. The dispute arose from the excess use of inputs and recovery of penalties from a job worker, which the revenue claimed should be reversed as they were not used in the final product's manufacture. The appellant argued that the excess utilization was due to processing losses and penalties were imposed to maintain efficiency. The appellant cited a previous Tribunal decision in a similar case where Cenvat credit was allowed. The Revenue, however, supported the impugned order.

The Tribunal examined the issue in light of previous decisions and held that the appellant was entitled to Cenvat credit. It was clarified that the excess utilization of inputs was not a case of non-utilization but rather due to processing losses, which did not warrant the reversal of credit. Referring to the precedent set in a previous case, the Tribunal ruled in favor of the appellant, allowing the appeal and setting aside the impugned order. The appellant was deemed entitled to take Cenvat credit without the need for any reversal due to excess consumption of inputs. The decision was made following the principles established in previous cases, providing consequential relief to the appellant.

In conclusion, the Tribunal's judgment favored the appellant, allowing the appeal against the denial of Cenvat credit of inputs, interest, and penalty imposition. The decision was based on the interpretation that the excess utilization of inputs was not a ground for denying the Cenvat credit, as it was attributed to processing losses and penalties imposed for maintaining efficiency. The appellant was granted relief in line with previous Tribunal decisions, emphasizing the entitlement to Cenvat credit without the requirement for reversal due to excess input consumption.