2017 (4) TMI 1121 - AT - Central Excise

CENVAT credit - job-work - denial on the ground that the input in respect of which job worker received the invoice were not received in the factory of the appellants - Held that - the cenvat credit on the inputs even though not received by the appellants is admissible for the reason that the same was admittedly used by the job worker in the job work goods of the appellants only - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Admissibility of cenvat credit on inputs purchased by job worker for manufacturing goods on behalf of the appellants.
2. Maintainability of revenue's appeal against the denial of cenvat credit.

Analysis:
1. The appellants, manufacturers of paper, availed cenvat credit under Rule 3 of Cenvat Credit Rules, 2004 for inputs used by a job worker in manufacturing goods on their behalf. The job worker purchased chemicals and inputs, issuing invoices in the appellants' name to pass on the cenvat credit. Disputes arose when the department disallowed the credit, stating the inputs were not received at the appellants' factory. The Commissioner (Appeals) upheld the disallowance, leading to the appeal before the tribunal. The appellants argued that since the inputs were used in their final product by the job worker, the credit should be allowed. The tribunal agreed, citing precedents like CCE vs. Vijayashree Instaprint Machinery and Flex Industries Ltd., emphasizing that ownership of the inputs remained with the appellants, justifying the admissibility of cenvat credit despite not physically receiving the inputs.

2. The revenue's appeal against the denial of cenvat credit was deemed not maintainable as the tribunal found the credit admissible based on the usage of inputs by the job worker for manufacturing goods on behalf of the appellants. Since the demand itself was deemed unsustainable, the tribunal dismissed the revenue's appeal, affirming the allowance of cenvat credit to the appellants. The tribunal's decision was based on the principle that the inputs, though not physically received by the appellants, were utilized in the manufacturing process of goods cleared by the appellants, justifying the admissibility of cenvat credit. The tribunal's ruling was in favor of the appellants, allowing their appeals and dismissing the revenue's appeal.