2016 (1) TMI 968 - AT - Central Excise

Eligibility to avail CENVAT credit on the amount of Central Excise Duty paid on moulds and dies - Moulds sent to job worker - period involved in this appeal is pre 21/07/1995 and post 21/07/1995 - Held that - As regards the case prior to 21/07/1995, we find that the show cause notice, and the adjudication order indicated how many moulds were sent to job worker prior to 21/07/1995, provisions of rules definitely indicate that the said moulds and dies, needs to be used in the factory of the manufacturer; on the specific query from the bench, Learned departmental representative was not able show from the records, how many moulds were received and sent out. On the specific query from the bench, learned counsel from the respondent submits that the moulds which were received prior to 21.07.1995 were sent out after 21.07.1995, but unable to produce any evidence; submits that out of 52 molds, 10 molds were received prior to 21.07.1995. In our considered view, the claim of the appellant that these 10 molds were received prior to 21.07.1995, was sent to job worker after being installed in factory premises and used, for the processing of plastic items is not evidenced. It is the submission that the respondent may be given an opportunity to do so. If respondent is able to justify their claim that these 10 moulds were installed in their factory and put to use and subsequently sent to job worker, they may have a case. For this limited purpose, we hold that the matter needs reconsideration by the adjudicating authority. Accordingly as has been directed by us, in respect of duty liability of 10 molds which were received prior to 21.07.1995, we remand the matter back to the adjudicating authority, to consider the issue afresh and arrive at a conclusion, after following the principles of natural justice and respondent may produce evidence if any, in support of their claim.

Summary

Issues:
- Eligibility to avail CENVAT credit on Central Excise duty paid on moulds and dies
- Compliance with Rule 57S of Central Excise Rules, 1944 pre and post 21/07/1995

Analysis:

Issue 1: Eligibility to avail CENVAT credit on Central Excise duty paid on moulds and dies:
The case involved a dispute regarding the eligibility of availing CENVAT credit on Central Excise duty paid on moulds and dies. The respondent, engaged in the manufacture of Electrical Accumulators, was found to have purchased 52 moulds without using them in their factory for manufacturing excisable goods. The appellants cleared these moulds to job workers for the production of plastic components. The adjudicating authority confirmed the demand for Central Excise duty on the moulds and imposed penalties. However, the first appellate authority set aside the order-in-original, emphasizing that the moulds were eventually received back from the job worker. The appellate tribunal noted the importance of compliance with Rule 57S of the Central Excise Rules, especially post 21/07/1995, allowing clearance of moulds to job workers with permission from the jurisdictional authority.

Issue 2: Compliance with Rule 57S of Central Excise Rules, 1944 pre and post 21/07/1995:
Regarding compliance with Rule 57S pre and post 21/07/1995, the tribunal observed that the provisions post 21/07/1995 explicitly permitted the clearance of moulds to job workers after obtaining permission. The first appellate authority's findings highlighted the necessity of seeking permission for such movements, which the appellants did after receiving the moulds back from the job worker. The tribunal emphasized the need for adherence to the rules and cited a relevant case law to support the appellants' compliance with the provisions. However, concerning the period pre-21/07/1995, the tribunal found discrepancies in the evidence presented by the respondent regarding the usage and installation of 10 moulds received before the specified date. Consequently, the matter was remanded back to the adjudicating authority for further consideration, allowing the respondent an opportunity to provide evidence supporting their claim.

In conclusion, the tribunal set aside the impugned order partially and directed a reconsideration by the adjudicating authority specifically for the 10 moulds received prior to 21/07/1995. The case highlighted the importance of strict adherence to the Central Excise Rules, especially concerning the movement and usage of capital goods like moulds and dies in the manufacturing process.