2017 (4) TMI 1218 - AT - Central Excise

CENVAT credit - capital goods - job-work - case of Revenue is that the capital goods involved in the present appeal are mostly consumables items like inserts, drills, tools and there is no likelihood of their being used in the manufacture of their own products in future and that too after a lapse of long period of over one and half years - Held that - the issue is squarely covered by the judgments of this Tribunal in the case of CCE vs. M/s. Kyungshin Industrial Motherson Ltd. 2015 (11) TMI 899 - MADRAS HIGH COURT , where it was held that The Tribunal has rightly held that availment of Modvat credit on capital goods to be job work is in order - appeal dismissed - decided against Revenue.

Summary

Issues:
Appeal against order allowing CENVAT credit on capital goods used for job work, denial of credit on waste and scrap, demand of duty, interest, and penalty.

Analysis:

1. Appeal by Revenue against CENVAT credit and demand of duty:
The Revenue filed an appeal against the order passed by the Commissioner (A) allowing the appeal of the assessee regarding CENVAT credit on capital goods used for job work. The Revenue had issued show-cause notices denying the credit and demanding duty on waste and scrap generated during the job work. The adjudicating authority disallowed part of the credit and demanded duty with interest and penalty. The Commissioner (A) allowed the appeal of the assessee, leading to the Revenue's present appeal.

2. Arguments by the learned AR and counsel for the assessee:
The learned AR for the Revenue argued that the impugned order was not sustainable, emphasizing that the capital goods involved were consumable items unlikely to be used in manufacturing future products. He cited precedents to support his argument. On the other hand, the counsel for the assessee contended that the issue had been settled in favor of the assessee by various Tribunal and High Court decisions, providing a list of relevant cases.

3. Judgment based on precedents and legal analysis:
After hearing both parties, the Tribunal found that the issue was settled by previous judgments. The Tribunal referred to specific cases and upheld the decision in favor of the assessee based on the principle that semi-finished goods removed under job work procedure would not be considered exempted final products for the purpose of CENVAT credit rules. The Tribunal relied on the judgment of the Hon'ble Madras High Court to support its decision.

4. Decision and dismissal of the appeal:
Based on the precedents and legal analysis, the Tribunal dismissed the Revenue's appeal, finding no merit in the arguments presented by the Revenue. The judgment was delivered in favor of the assessee, upholding the decision of the Commissioner (A) to allow the CENVAT credit on capital goods used for job work.

In conclusion, the Tribunal's judgment in this case reaffirmed the settled legal position regarding CENVAT credit on capital goods used for job work and waste and scrap generated during the process, ultimately ruling in favor of the assessee and dismissing the Revenue's appeal.