2016 (9) TMI 38 - AT - Central Excise

Recovery of Cenvat credit and interest - irregularly taken on inputs which resulted in double benefit to the appellant - appellant submitted that removal of inputs under Rule 4(5)(a) for processing and return cannot be construed as removal of inputs as such under Rule 3(5) - Held that - after considering the provisions of Rule 3(5) and 4(5)(a) of the Cenvat Credit Rules 2004 and the judgments of the Tribunal in the case of Southern Lubrication (P) Ltd. Vs. CCE, Bangalore 2012 (1) TMI 106 - CESTAT BANGALORE , I am of the considered opinion that appellant s case is squarely covered by the said decision wherein it has been held that the removal of input or capital goods to a job worker for further processing, testing, repair, reconditioning or any other purpose is governed by Rule 4(5)(a) of the Cenvat Credit Rules, 2004. Therefore, by following the same, the impugned orders are set aside. - Decided in favour of appellant with consequential relief

Summary

Issues involved:
- Dispute over demand of duty and penalty for different periods
- Applicability of Cenvat Credit Rules 2004
- Interpretation of Rule 3(5) and Rule 4(5)(a) of Cenvat Credit Rules 2004

Analysis:

1. Dispute over demand of duty and penalty:
The appeals were filed against orders upholding the rejection of appeals by the Commissioner. The appellant, a partnership firm engaged in manufacturing packing articles, availed cenvat credit on inputs through job workers. The department objected to the credit taken on inputs, alleging double benefit to the appellant. Show-cause notices were issued, leading to the recovery of irregularly taken cenvat credit and imposition of penalties. The Commissioner upheld these decisions, prompting the appeals.

2. Applicability of Cenvat Credit Rules 2004:
The appellant argued that the impugned orders disregarded binding judicial precedents and misapplied the law. They contended that the removal of inputs for processing and return did not align with Rule 3(5) but rather with Rule 4(5)(a) of the Cenvat Credit Rules 2004. The appellant highlighted differences between the two rules and cited relevant case laws to support their position.

3. Interpretation of Rule 3(5) and Rule 4(5)(a) of Cenvat Credit Rules 2004:
The learned counsel emphasized that Rule 4(5)(a) applied to the appellant's situation, requiring the return of goods within 180 days or reversal of credit. They argued that since there was no dispute regarding the timely receipt of goods, Rule 4(5)(a) should prevail over Rule 3(5). The learned AR, however, supported the impugned order's findings. Upon considering the provisions of Rule 3(5) and Rule 4(5)(a) along with relevant case law, the Tribunal concluded that the appellant's case fell under Rule 4(5)(a). As a result, the impugned orders were deemed unsustainable in law and were set aside, allowing the appeals with consequential relief.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the Tribunal's decision based on the interpretation of relevant legal provisions and precedents.