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2016 (12) TMI 388 - AT - Central ExciseAvailment of CENVAT credit twice - inputs - Vacuum Interrupter Tubes - job work - Held that - I find that the Respondent had cleared the input VIT to the job worker M/s BMC Electroplast Pvt Ltd who ultimately on assembling with other components, converted the said product into TSA. While clearing TSA, the job worker instead of paying duty only on the items procured by him and used in the TSA, but paid duly on the entire value of the TSA, which included the value of the VIT. Ultimately, the Respondent had availed Cenvat Credit on the TSA including duty paid on VIT which has gone into the manufacture of said assembly. To avoid complication, the appellant could have followed the procedure laid down under Rule 3 (5) of Cenvat Credit Rules while clearing inputs as such viz., VIT but that itself cannot be the ground for recovery of Cenvat Credit on the said Input, which was received back by them from the job worker contained in the TSA, on which appropriate duty was paid by the job worker. I find that the Ld Commissioner(Appeals) has recorded the same reasoning while allowing the Appeal of the Respondent and setting aside the order of adjudicating authority - Availment of CENVAT credit in order - appeal dismissed - decided against Revenue.
Issues: Revenue appealing against availing Cenvat Credit twice on Vacuum Interrupter Tubes (VIT) by the Respondents.
Analysis: 1. Issue of Availing Cenvat Credit Twice: The case revolves around the Respondents availing Cenvat Credit on Vacuum Interrupter Tubes (VIT) twice, leading to demand notices for recovery of credit amounting to ?19,59,501 during 2004-05 and 2005-06. The Revenue argued that the Respondents availed credit on VIT both when received and later from the job worker, constituting double benefit. Conversely, the Respondents contended that they correctly availed credit when receiving the inputs, which were then sent for further processing to the job worker. The job worker, after using VIT in the assembly of the final product, paid duty on the total value of the assembly, including VIT. Therefore, the Respondents claimed Cenvat Credit on the assembly, not on the raw VIT itself, justifying that it did not amount to double credit on the same inputs. 2. Procedure Followed in Processing Inputs: The Respondents cleared VIT to the job worker, who transformed them into Trolley Sub-Assembly (TSA) along with other components. The job worker paid duty on the entire value of TSA, encompassing the value of VIT. The Respondents then availed Cenvat Credit on TSA, which included the duty paid on VIT. The Tribunal noted that the job worker's duty payment covered the VIT value within the TSA, and the Respondents' credit was rightfully claimed on the assembly. The Tribunal highlighted that following Rule 3(5) of Cenvat Credit Rules while clearing VIT separately could have simplified the process, but the absence of this step did not warrant credit recovery on inputs received back from the job worker in the form of TSA. 3. Decision and Upholding of Appeal: The Tribunal upheld the decision of the Ld Commissioner (Appeals) who allowed the Respondents' appeal, setting aside the order of the Adjudicating Authority. It concluded that the Respondents did not avail Cenvat Credit twice on VIT, as the credit was rightfully claimed on the TSA, which integrated the VIT value paid for by the job worker. Consequently, the Revenue's appeal was rejected as lacking merit, affirming the impugned order in favor of the Respondents.
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