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2017 (7) TMI 91 - AT - Central ExciseCENVAT credit - job-work - capital goods transferred to job-worker s premises - whether the CENVAT credit availed on the capital goods sent to their sister unit for job work and not received back within 180 days from the date of removal is recoverable or otherwise? - Rule 4(5)(a) of CCR - Held that - Rule 4(5)(a) makes it crystal clear that the capital goods removed from the appellant s factory should be received back within 180 days and if not received the appellant is required to reverse the credit availed on such capital goods. The said Rule also provides to take re-credit on the capital goods when received after 180 days from the initial date of removal - In the present case even though the capital goods were cleared earlier but no evidence has been adduced by the appellant that the same were received within 180 days or thereafter. In these circumstances the confirmation of demand is sustainable - penalty under Rule 15(2) of CENVAT Credit Rules 2004 read with Section 11AC of CEA 1944 cannot be sustained as it is a revenue neutral situation - appeal allowed - decided partly in favor of appellant.
Issues:
1. Admissibility of CENVAT credit on capital goods transferred to sister unit for job work. 2. Applicability of Rule 4(5)(a) of CENVAT Credit Rules, 2004. 3. Imposition of penalty under Rule 15(2) of CENVAT Credit Rules, 2004. Admissibility of CENVAT credit on capital goods transferred to sister unit for job work: The case involved an appeal against a show cause notice alleging that credit availed on capital goods transferred to a sister unit for job work was recoverable. The appellant argued that as the job work was exclusively for them, the credit should not be denied. The Tribunal examined the relevant Rule 4(5)(a) of CENVAT Credit Rules, 2004, which allows credit on inputs sent for job work if received back within 180 days. The appellant failed to provide evidence of timely return, leading to the confirmation of the demand for recovery. However, the Tribunal allowed re-credit if the goods were received after 180 days. The judgment clarified the conditions for availing CENVAT credit in such scenarios. Applicability of Rule 4(5)(a) of CENVAT Credit Rules, 2004: The Tribunal analyzed Rule 4(5)(a) to determine the admissibility of credit on capital goods sent for job work. The rule mandates that goods must be returned within 180 days for credit availed. In this case, the appellant did not demonstrate timely return of the goods, leading to the requirement of reversing the credit. The judgment emphasized the importance of complying with the provisions of the CENVAT Credit Rules to avoid recovery of credits and penalties. The interpretation of the rule played a crucial role in deciding the outcome of the appeal. Imposition of penalty under Rule 15(2) of CENVAT Credit Rules, 2004: Regarding the penalty imposed under Rule 15(2) of CENVAT Credit Rules, 2004, the Tribunal referred to a judgment by the Hon'ble Gujarat High Court to conclude that the penalty could not be sustained. Citing the case of Patel Alloys Steel Pvt. Ltd., the Tribunal set aside the penalty, partially allowing the appeal on this ground. The judgment highlighted the significance of legal precedents in determining the applicability of penalties under the CENVAT Credit Rules. The decision provided clarity on the consequences of non-compliance with the rules and the scope of penalties in such cases. This detailed analysis of the judgment from the Appellate Tribunal CESTAT AHMEDABAD underscores the importance of understanding and adhering to the provisions of the CENVAT Credit Rules, particularly in cases involving the transfer of capital goods for job work. The judgment serves as a valuable reference for interpreting the rules governing CENVAT credits and provides insights into the consequences of non-compliance and the applicability of penalties in such situations.
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