2015 (10) TMI 137 - AT - Central Excise

Denial of CENVAT Credit - whether the appellant is entitled to take CENVAT Credit on the inputs which has lost during the process of manufacturing at the end of job worker or not - Held that - As per Rule 4 (v) (a) of the CENVAT Credit Rules, 2004, Ld. counsel for the appellant has explained the process of manufacturing. As per the process of manufacturing, the led contains dust and clay, thereafter, it is to be granted and filtered vast and dissolved in water. The material is required to be removed and then it is to be dissolved with the chemical then the undesired particles remove and chemical slug recovered from thereof. If this is the manufacturing process in that way, whatever input have sent to the job worker for manufacturing, definitely the appellant will not receive the full quantity of inputs converted into final goods. - if whole of the inputs have been used for manufacturing and there is a process loss, same is required to be allowed. The Revenue has not contraverted, this contention with any supporting evidence that in the process of manufacturing of goods, there is no manufacturing loss and also have not obtained any expert opinion thereof. - appellant is entitled to take CENVAT Credit on the inputs which has gone for manufacturing at the end of job worker - Decided in favour of assessee.

Summary

Issues:
1. Denial of CENVAT credit by lower authorities due to non-receipt of inputs from job worker within 180 days.
2. Interpretation of Rule 4(v)(a) of the CENVAT Credit Rules, 2004 regarding reversal of credit for inputs not received within stipulated time.
3. Applicability of process losses in job work and entitlement to CENVAT credit.
4. Comparison with previous judgments and relevance to the current case.
5. Adjudication of whether appellant can claim CENVAT credit on inputs lost during manufacturing process at job worker's end.

Analysis:
The appellant contested the denial of CENVAT credit by lower authorities based on non-receipt of inputs within 180 days, arguing that process losses like slug and gas evaporation are inherent in job work. The appellant maintained they rightfully claimed credit for inputs sent to the job worker, emphasizing they received the processed quantity in full. The appellant cited a previous favorable decision by the Commissioner (Appeal) and a Tribunal case supporting process losses. Conversely, the respondent argued for the reversal of CENVAT credit as per Rule 4(v)(a) of the CENVAT Credit Rules, emphasizing the mandatory requirement to reverse credit for inputs not received within the specified period.

The key issue revolved around whether the appellant could claim CENVAT credit for inputs lost during the manufacturing process at the job worker's end. The Tribunal analyzed the manufacturing process involving lead concentrate, noting physical and invisible losses inherent in the process. Referring to the Commissioner (Appeal)'s prior decision, the Tribunal highlighted that manufacturing losses, such as burnt or evaporated material, should not lead to disallowance of CENVAT credit. The Tribunal emphasized the absence of evidence supporting the denial of credit and the lack of expert opinion on manufacturing losses, ultimately concurring with the Commissioner (Appeal)'s findings.

In conclusion, the Tribunal ruled in favor of the appellant, allowing them to claim CENVAT credit on inputs lost during the manufacturing process at the job worker's end. The impugned orders denying credit were set aside, and the appeals were allowed with any consequential relief. The Tribunal's decision was based on the acknowledgment of process losses and the absence of evidence contradicting the appellant's entitlement to credit for inputs used in manufacturing despite losses incurred.