2017 (10) TMI 435 - AT - Central Excise

CENVAT credit - job-work - short receipt goods from job worker - Held that - The short receipt of processed goods is only on account of process loss at the end of the job worker and there is no allegation that either the inputs have been diverted or the processed goods have been diverted. In the absence of those evidence, the Cenvat credit cannot be denied on the differential quantity of inputs and processed goods - similar issue decided in the case of M/s Real Ispat And Power Ltd. Versus Commissioner of Central Excise And Customs, Raipur 2016 (4) TMI 327 - CESTAT NEW DELHI , where it was held that As there is no allegation of diversion of inputs or processed goods, the Cenvat credit taken up by the appellant cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
Appeal against denial of Cenvat credit on short receipt goods from job worker during June, 2008 to August, 2013.

Analysis:
The appellant contested the denial of Cenvat credit due to short receipt of processed goods from the job worker, arguing that there was no diversion of inputs or processed goods. Losses incurred during processing resulted in a differential quantity of goods received, but without any diversion. Citing a previous case, the appellant asserted that Cenvat credit should not be denied in such circumstances. The appellant also highlighted that the Commissioner (Appeals) allowed Cenvat credit for subsequent periods on similar grounds, further supporting their claim.

The Revenue, on the other hand, reiterated the findings of the impugned order, maintaining the denial of Cenvat credit on the differential quantity of goods.

After considering both sides' submissions, the Tribunal observed that the short receipt of processed goods was solely due to process loss at the job worker's end, with no evidence of diversion of inputs or processed goods. Referring to a previous case, the Tribunal emphasized that loss occurring during the manufacturing process should not lead to denial of Cenvat credit. The Tribunal noted that the reasoning for disallowing the credit was not sustainable, especially when there was no mala fide intention or suppression by the appellant. Consequently, the impugned order was deemed unsustainable, and the appeal was allowed in favor of the appellant, granting them the right to avail Cenvat credit on the differential quantity of inputs and processed goods received from the job worker. The Tribunal also pointed out that the Commissioner (Appeals) had allowed Cenvat credit for similar cases in the appellant's subsequent period, further supporting the decision to set aside the impugned orders.

In conclusion, the Tribunal allowed the appeals, setting aside the impugned orders and granting relief to the appellant in accordance with the law.