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2015 (10) TMI 1362 - AT - Central ExciseDenial of CENVAT Credit - whether the assessee is entitled to take Cenvat Credit on the inputs which is gone in the process of manufacturer of final product and during the process some inputs have been lost as floor sweeping or not - Held that - Clause (5C) to Rule 3 of the Cenvat Credit Rules, 2004 would be invoked where on any goods manufactured or produced by an assessee, the payment of duty is ordered to be remitted under Rule 21 of the Central Excise Rules 2002, the Cenvat Credit taken on the inputs used in the manufacture of production of said goods shall be reversed. - In view of the items referred to in clause (5C) to Rule 3 of the Cenvat Credit Rules, 2004, the question of reversal would occur only when the payment of duty is ordered to be remitted under Rule 21 of the Central Excise Rules 2002. The said Rule deals with remission of duty. Admittedly, the assessee has not claimed any remission and no final product has been removed. Hence, for that reason also, reliance was placed on clause (5C) to Rule 3 of the Cenvat Credit Rules, 2004. Following the decision in the case of Fenner India Ltd. (2014 (11) TMI 704 - MADRAS HIGH COURT) I hold that the provisions of Rule 21 of the Central Excise Rules 2002 and provisions of Rule 3(5)(c) and Cenvat Credit Rules 2004 are not applicable to the facts of this case. Consequently, the goods lost in work in process the assessee is entitled to take Cenvat Credit. Consequently, I hold that the assessee has correctly taken the Cenvat Credit on the inputs which has been lost during the work in progress and same has been affirmed by this Tribunal in the case of Harinagar Sugar Mills Ltd. (2014 (5) TMI 494 - CESTAT MUMBAI). - Decided in favour of assessee.
Issues:
1. Whether the assessee is entitled to Cenvat Credit on floor sweepings arising during the manufacturing process. Analysis: The case involved an appeal regarding the denial of Cenvat Credit on floor sweepings by the revenue for the period April 2006 to August 2011. The assessee, a manufacturer of chocolates and coco products, claimed that the floor sweepings were part of the manufacturing process and not liable to duty. The issue revolved around Rule 3(5)(c) of the Cenvat Credit Rules 2004. The Ld. Commissioner (A) allowed the credit for a specific period but denied it for subsequent periods based on the rule. The assessee argued that the sweepings were inputs in the manufacturing process, citing relevant case laws supporting their position. The revenue contended that as the goods were not dutiable, Cenvat Credit should not be allowed. They relied on case law to support their argument and highlighted Rule 3(5)(c) of the Cenvat Credit Rules 2004. The Tribunal considered the submissions of both parties and analyzed the relevant legal provisions and precedents to determine the entitlement to Cenvat Credit on the lost inputs during the manufacturing process. The Tribunal examined various decisions cited by both parties, including the case of Virat Crane Agri-Tech Ltd. and Asian Paints (I) Ltd., to assess their applicability to the present case. It was noted that the decisions did not directly align with the facts of the current case. The Tribunal also reviewed the case of Fenner India Ltd., where it was established that if inputs were destroyed during work in progress, the assessee was not required to file a remission claim. Relying on this precedent, the Tribunal concluded that the provisions of Rule 3(5)(c) of the Cenvat Credit Rules 2004 were not applicable in the current scenario. Consequently, the Tribunal held that the assessee was entitled to take Cenvat Credit on the inputs lost during the manufacturing process, affirming the position taken in the case of Harinagar Sugar Mills Ltd. In conclusion, the Tribunal dismissed the revenue's appeal and allowed the assessee's appeal, granting consequential relief.
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