2017 (1) TMI 80 - AT - Central Excise

Rejection of refund - Cenvat credit - Notification No. 214/86 - that as per express provisions provided under Rule 3 of Cenvat Credit Rules, 2004, credit is admissible to a jobworker on inputs used in jobwork activity undertaken in terms of Notification supra - In such circumstances, when the amount has been paid on the objection raised by the audit, it is deemed that the same has been paid Under Protest and the refund claim filed by the Appellant is in order - I also find from records that the Appellant has submitted the certificate issued by the Chartered Accountant, certifying that the said amount is shown as recoverable from the department in the accounts of the Appellant and the same has not been disputed by the revenue - Appeal allowed - decided in favor of the assessee.

Summary

Issues:
Rejection of refund claim based on admissibility of Cenvat credit on goods used in jobwork activity.

Analysis:
The appellant, a manufacturer of Sheet Metal Parts, availed Cenvat credit on Central Excise duty paid on paints used in jobwork activity. The Central Excise Department issued spot memos to reverse the credit on inputs used in jobwork, leading to the appellant reversing the credit amount. The appellant filed a refund claim, which was rejected by the Department on the grounds of inadmissibility of credit for goods used in jobwork cleared without payment of duty. The adjudicating authority and Commissioner upheld the rejection, stating the appellant cleared goods without duty payment and recovered paint costs without credit reversal.

The Tribunal found that as per Rule 3 of Cenvat Credit Rules, credit is admissible on inputs used in jobwork activity as per Notification No. 214/86 - CE. Referring to precedent cases, the Tribunal held that the appellant was not required to reverse the credit on paints used in jobwork. The reversal was done under protest due to audit objections, making the refund claim valid. The Tribunal cited cases where amounts paid under protest were deemed eligible for refund, supported by a certificate from a Chartered Accountant showing the amount as recoverable from the department.

Conclusively, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant for the refund claim, with consequential relief. The decision was based on the admissibility of Cenvat credit on goods used in jobwork activity and the appellant's payment under protest, supported by legal provisions and precedents.