2015 (11) TMI 246 - AT - Central Excise

Denial of CENVAT Credit - Credit in respect of imported fitment which has been cleared under Rule 4(5)(a) on job work challan to M/s. NSSL and M/s. NSSL has carried out process of fitting of fitment in the cylinder head and the said final products have been exported directly from the premises of Job worker - Held that - It is observed that even though partly goods were manufactured by the job worker but part of the process i.e. fitting of fitment supplied by the appellant was carried out by the job worker on behalf of the appellant and thereafter the final product has been completed, the said final product since then exported on behalf of the appellant only therefore even though part manufacturing carried out by job worker on their own since entire final product is complete on behalf of the appellant and said final product has been exported on behalf of the appellant they are legally entitled for Cenvat Credit in respect of fitment. From the records, it is observed that the supply of fitment by the appellant under Rule 4(5)(a), use of said fitment for export goods and the export of the final product though from the premises of the job worker ie M/s. NSSL is not under dispute, on the basis of invoices, ARE 1 and other export documents, the Cenvat Credit in respect of fitment used in the export goods cannot be denied. - from where the goods have been exported is not much of relevance, it is export irrespective of locations, either from the appellant s premises or from the job workers premises(M/s. NSSL) the Cenvat Credit should be allowed on input used in the export goods. In view of my above discussion, I am of the considered view that appellant is entitled for the Cenvat Credit in respect of fitment used in the final product by the job worker M/s. NSSL and cleared final product from the premises of job worker for export on behalf of the appellant. - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit on fitments used in exported goods.
2. Appellant's entitlement to Cenvat Credit.
3. Interpretation of Rule 4(5)(a) regarding job work and Cenvat Credit.

Analysis:

Issue 1: Denial of Cenvat credit on fitments used in exported goods
The case involved a dispute over the denial of Cenvat credit amounting to a specific sum on fitments used in goods exported from the premises of a company. The Commissioner of Central Excise & Customs(Appeals) upheld the demand related to fitments exported from one company's premises but remanded the issue concerning fitments exported from the appellant's premises. The adjudicating authority initially disallowed the Cenvat credit and imposed a penalty, leading to the appellant's appeal against the decision.

Issue 2: Appellant's entitlement to Cenvat Credit
The appellant claimed entitlement to Cenvat Credit for imported fitments sent to another company for fitting into cylinder heads, which were then exported. The appellant argued that since the fitments were used on their behalf by the job worker in the final product, Cenvat Credit should be allowed. The appellant presented relevant challans, ARE-1 forms, and records of goods sent for job work to support their claim. The appellant cited various case laws to strengthen their argument regarding the admissibility of Cenvat Credit in similar circumstances.

Issue 3: Interpretation of Rule 4(5)(a) regarding job work and Cenvat Credit
The Tribunal analyzed the application of Rule 4(5)(a) in the context of job work and Cenvat Credit. It was observed that although the job worker partly manufactured the goods, the fitting of fitments supplied by the appellant was crucial in the final product's completion. The Tribunal emphasized that since the final product was exported on behalf of the appellant, they were legally entitled to Cenvat Credit for the fitments used. The Tribunal highlighted that the location of export, whether from the appellant's premises or the job worker's premises, should not impact the admissibility of Cenvat Credit for inputs used in exported goods. Consequently, the Tribunal modified the impugned order and allowed the appeal, affirming the appellant's entitlement to Cenvat Credit for fitments used in the exported goods.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved and the Tribunal's decision regarding the denial of Cenvat credit and the appellant's entitlement to Cenvat Credit under Rule 4(5)(a) in the context of job work and exported goods.