2006 (5) TMI 87 - AT - Central Excise

It is observed that the appellant had received the goods and had taken credit of the duty paid on those goods which had been sent under 52A invoices. The Commissioner cannot revise or restrict the credit admissible to the appellant who received the goods on payment of duty under cover of prescribed statutory documents. Therefore, the impugned order demanding credit of duty availed by the appellant, of the duty paid on the goods received by it, after repair/reconditioning is not sustainable.

Summary

Issues:
1. Credit availed by the appellant on duty paid by job workers.
2. Competency of Central Excise Officers to revise assessment.
3. Entitlement of appellant to take credit of duty paid by job worker.
4. Jurisdiction over recipient of inputs for credit restriction.
5. Calculation of duty liability on processed oil.
6. Eligibility for lower credit due to oil lost in process.

Analysis:
1. The appellant, M/s. SPIC (HCD), had taken credit of duty paid by its job workers on repaired/processed transformer oil and the transformer. The original authority confirmed the demand of credit to the extent of Rs. 1,83,966/- under Rule 57U of the Central Excise Rules, 1944, stating that the job workers were not required to pay duty on the repaired capital goods. The Commissioner (Appeals) upheld this decision.

2. The appellant argued that Central Excise Officers did not have the competence to revise the assessment on the invoice covering the goods received. Citing a Tribunal case, it was claimed that the appellant was entitled to take credit of duty paid by the job worker regardless of whether the job worker was required to pay duty.

3. The Tribunal found that the appellant had received goods and taken credit of duty paid on those goods sent under 52A invoices. The Commissioner could not revise or restrict the credit admissible to the appellant, who received goods on payment of duty under statutory documents. Therefore, the demand for credit of duty availed by the appellant was deemed unsustainable.

4. Referring to a Tribunal case, it was established that the recipient of inputs was entitled to take credit of duty paid on the inputs received, and this credit could not be restricted by the authority having jurisdiction over the recipient. This principle applied to capital goods credit as well.

5. The appellant had calculated duty liability on processed oil based on the quantity of used oil received for processing. As there was no shortage in the oil received compared to the processed oil cleared by the job worker, the lower authorities' argument for lower credit due to lost oil in the process was deemed invalid.

6. In conclusion, the appeal was allowed, and the impugned order demanding credit of duty availed by the appellant was set aside, based on the principles of jurisdiction, entitlement to credit, and calculation of duty liability.