2007 (11) TMI 268 - AT - Central Excise

Inputs received from the supplier who manufactured goods (inputs) on job-work basis Credit documents issued - There is no dispute about the duty paid nature of the goods manufactured on job work basis and that the duty has been paid by supplier on such goods - Therefore, in the peculiar facts and circumstances of the case, credit taken cannot be held to be irregular. No case has been made out by revenue for interfering with the orders of the Commissioner (Appeals)

Summary

Issues:
Appeal involving common issue of supply of goods as input by a common supplier.

Analysis:
In the case of Appeal No.E/261/07, Amul Industries (P) Ltd. supplied crank shafts manufactured on job work basis to Unit I and other parties. Unit I availed credit on the materials supplied by Unit V, leading to a dispute over credit availed. The original authority denied the credit, but the Commissioner (Appeals) overturned this decision. On the other hand, in Appeal No.E/262/2007, crank shafts supplied by Unit V of Amul Industries (P) Ltd. were received by M/s Advin Diesels. Both the original authority and the Commissioner (Appeals) deemed them eligible for credit. The duty on the materials supplied by Unit V was paid by Amul Industries (P) Ltd., but the department argued that Unit I and M/s Advin Diesels did not fulfill their obligations under the Cenvat Credit Rules. However, it was established that Unit V was registered, manufactured goods on job work basis, and paid duty on the goods, making the credit taken by Unit I and M/s Advin Diesels valid. The Tribunal found no irregularity in the credits taken and upheld the Commissioner (Appeals) orders, rejecting the appeals.

This judgment clarifies the eligibility of recipients for credit on goods supplied by a common supplier under the Cenvat Credit Rules. It emphasizes the importance of fulfilling obligations under the rules and ensuring duty payment on goods supplied. The decision highlights the significance of the manufacturer's registration, manufacturing process, and duty payment in determining the validity of credit availed by recipients. The Tribunal's analysis indicates that in cases where the supplier has met their obligations and paid duty, recipients cannot be penalized for availing credit on such goods. The judgment provides a clear interpretation of the rules and sets a precedent for similar cases involving credit availed on goods supplied by a common manufacturer.