2015 (10) TMI 1033 - AT - Central Excise

Denial of CENVAT Credit - Whether for the month of April 2003, the appellant have taken cenvat credit in respect of the inputs in process, without including the value of the processing chemicals and processing charges - Held that - Appellant for the calculation of cenvat credit, as per the formula prescribed in notification 35/03-CE NT dated 10.04.2003, have also included the value of the colours, processing chemicals and processing charges while they should have calculated quantum of cenvat credit only on the value of grey fabrics, this allegation is denied by the appellant. So far as the question of admissibility of the cenvat credit on the processing charges is concerned, we are of the view that this issue stands decided against the appellant by the Tribunal s judgment in the case of BB Shah P. Ltd. vs CCE Jaipur-II reported in 2007 (10) TMI 202 - CESTAT, NEW DELHI . From the order in original passed by the Assistant Commissioner and from the order in appeal, it is not clear as to on what basis the Department has concluded that the cenvat credit has been calculated on the value of the grey fabrics including the value of the processing charges and the value of the colours and chemicals. In view of this, the impugned order is set aside - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
Dispute over availing cenvat credit for inputs in process without including processing charges and chemicals.

Analysis:
The appellant, an independent processor of grey fabrics, was involved in a dispute regarding cenvat credit for the month of April 2003. The issue stemmed from the introduction of cenvat credit for textile items under Rule 9A of the cenvat credit Rules, 2002. The Department alleged that the appellant included the value of processing charges for certain lots, resulting in an excess cenvat credit of Rs. 2,37,080. The appellant refuted this claim, asserting that they only claimed credit for inputs and did not include the value of processing charges, colours, and chemicals in process.

During the hearing, the appellant's counsel argued that the Department's allegation lacked a factual basis, challenging the correctness of the impugned order. On the other hand, the Department defended its position, stating that the appellant did not dispute including processing charges for cenvat credit calculation in the lower authorities' proceedings. The Tribunal examined both sides' contentions and reviewed the records to resolve the dispute.

The crux of the matter revolved around whether the appellant had indeed included the value of processing chemicals and charges while calculating cenvat credit for inputs in process. The Department contended that the appellant improperly factored in these additional costs, contrary to the prescribed formula in notification 35/03-CE NT dated 10.04.2003. However, the appellant denied these allegations. The Tribunal noted a previous judgment that settled the admissibility of cenvat credit on processing charges but highlighted the need to ascertain whether the appellant accurately calculated the credit based solely on the value of grey fabrics in process.

Upon review, the Tribunal found discrepancies in the basis on which the Department concluded that the appellant included processing charges and chemicals in the cenvat credit calculation. Due to this ambiguity, the impugned order was set aside, and the matter was remanded to the Original Adjudicating Authority for a fresh adjudication. The Authority was instructed to consider the appellant's assertion that they did not include the value of chemicals, colours, and processing charges while determining the cenvat credit quantum.