2007 (10) TMI 87 - AT - Central Excise

Use of inputs LDO/LPG in goods mfd. on job work basis & cleared without payment of duty Credit on such goods cannot be recovered by Dept. because the phrase inputs intended to be used as fuel were dropped from Rule 6(2) CCR on 16.5.05 but instant case is related to period before that amendment

Summary

Issues:
- Department's appeal against the order of the Commissioner (Appeals) regarding cenvat credit reversal for goods manufactured on job work basis

Analysis:
The case involved a Department's appeal against the order of the Commissioner (Appeals) regarding the reversal of cenvat credit for goods manufactured on job work basis. The respondent was availing cenvat credit for LDO and LPG used in manufacturing. The Department contended that since no duty was paid for goods manufactured on job work basis, the cenvat credit of Rs. 81,019 on inputs LDO/LPG should be reversed. The original authority and the Commissioner (Appeals) both ruled in favor of the respondent. The respondent relied on a Tribunal decision and argued that fuel was excluded from the operation under certain rules, hence no recovery should be made for LDO/LPG used in goods manufactured on job work basis.

The Tribunal considered the submissions from both sides and noted that the dispute was related to a period before 16.5.05. It was highlighted that from 16.5.05, certain words and phrases were dropped from the Cenvat Credit Rules, 2004, indicating a change in the rules. The Commissioner (Appeals) had also referenced a relevant decision in a similar case. The Tribunal found no valid ground to interfere with the concurrent findings of the original authority and the Commissioner (Appeals). Consequently, the appeal was rejected, affirming the decision in favor of the respondent regarding the cenvat credit reversal for goods manufactured on job work basis.

This judgment provides clarity on the application of rules related to cenvat credit reversal for goods manufactured on job work basis and the exclusion of fuel from certain operations. It emphasizes the importance of considering relevant legal provisions and past decisions in reaching a decision. The judgment underscores the significance of the effective date of rule changes and their impact on ongoing disputes. Overall, the judgment highlights the need for a thorough analysis of legal provisions and precedents in resolving such matters.