2016 (10) TMI 302 - AT - Central Excise

Denial of CENVAT credit - capital goods cleared without payment of duty - Held that - the respondent has cleared the capital goods under Rule 4(5)(a) of Cenvat Credit Rules, 2004 and received back in the factory. The documentary evidence to that effect has been filed by the respondents on 28.10.2015 before the adjudicating authority and the same has not been considered but the same has been considered by the Commissioner (Appeals) - credit allowed. Inputs and input service used for manufacturing of job work goods - Held that - As the principal manufacturer is discharging duty liability on job work goods, the respondent is entitled to take credit on inputs and input service. Capital goods- moulds and dies ultimately used for manufacturing dutiable products - Held that - the decision in the case of BHARAT FORGE LTD. Versus COMMISSIONER OF CENTRAL EXCISE, PUNE-III 2003 (10) TMI 175 - CESTAT, MUMBAI relied upon where CBEC circular dated 3-4-2000 referred in which the Board has clarified that Cenvat credit should not be denied if the inputs are used in the intermediate of the final products even if the intermediate is exempt from payment of duty - credit allowed on capital goods which are used for manufacture of dutiable goods. Security services received in the factory - Held that - as per Rule (2(l) of Cenvat Credit Rules, 2004 as held by the Hon ble Bombay High Court in the case of CCE, Nagpur Versus Ultratech Cement Ltd 2010 (10) TMI 13 - BOMBAY HIGH COURT the respondent has credit correctly on security services. Appeal allowed - decided against Revenue.

Issues:
1. Cenvat credit on capital goods cleared without payment of duty.
2. Cenvat credit on inputs and input service for job work goods.
3. Denial of credit on capital goods used for manufacturing dutiable products.
4. Credit on security services in the factory.

Analysis:

1. Cenvat credit on capital goods cleared without payment of duty:
The respondent cleared capital goods under Rule 4(5)(a) of Cenvat Credit Rules, 2004 and received them back in the factory. The documentary evidence was filed before the adjudicating authority, which was not considered initially but was accepted by the Commissioner (Appeals). The Tribunal found no issue with allowing credit on the capital goods to the respondent.

2. Cenvat credit on inputs and input service for job work goods:
Since the principal manufacturer is paying duty on job work goods, the respondent is entitled to take credit on inputs and input services. This issue had been previously settled by the Tribunal in a prior order.

3. Denial of credit on capital goods used for manufacturing dutiable products:
Referring to a previous Tribunal case, it was clarified that Cenvat credit should not be denied on capital goods used in the manufacture of intermediate goods exempt from duty, if the final products in which the intermediate goods are consumed carry duty. The Tribunal held that the respondent correctly took credit on capital goods used for manufacturing dutiable goods.

4. Credit on security services in the factory:
The respondent availed credit on security services as part of their manufacturing activities. The Tribunal cited a judgment of the Hon'ble Bombay High Court to support the respondent's eligibility for credit on security services. Consequently, the Tribunal upheld the impugned order, dismissing the appeal filed by the Revenue.

In conclusion, the Tribunal found in favor of the respondent on all issues raised in the appeal, upholding the impugned order and dismissing the Revenue's appeal.

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