2017 (12) TMI 379 - AT - Central Excise

CENVAT credit - job-work - case of Revenue is that the appellant/job worker have not received inputs namely Stainless Steel Patta/Patti which was claimed to have used for manufacture of utensils by the job worker on behalf of the appellant - Held that - merely because the description mentioned in some of the invoices as SSCR coils does not prove that appellant s job worker have not received Patta/Patti for the reason that even Patta/Patti may or may not be in coil or strips form. Therefore this material cannot be conclusive evidence that the goods covered invoice was not received by the job worker. The goods are manufactured on the basis under Rule 4(5)(a) of the CCR, 2004, it is not mandatory on the part of the appellant to carry out in manufacturing activity. Hence, it is not under dispute that the appellant have discharged the Central Excise duty liability in respect of job worked goods, irrespective whether the appellant themselves carry out the manufacturing activity on such job work goods or otherwise, they are legally entitled for the CENVAT credit in respect of inputs sent to the job worker in terms of Rule 4(5)(a) of the CCR, 2004. The Adjudicating Authority as well as Commissioner (Appeals) have not considered the Octroi receipt in defence of the appellant which is very vital evidence as to conclude the present matter the same needs to be reconsidered - appeal allowed by way of remand.

Summary

Issues:
Appeal against disallowance of CENVAT credit of ?35,72,402 upheld by Commissioner of Central Excise (Appeals) - Non-receipt of inputs by job worker - Evidence from Bhilad Check Post - Discrepancy in goods description - Octroi receipts submitted as evidence - Manufacturing activity by job worker - Admissibility of CENVAT credit.

Analysis:
The appeals were filed against the Order-in-Appeal upholding the disallowance of CENVAT credit amounting to ?35,72,402 by the Commissioner of Central Excise (Appeals). The issue revolved around the non-receipt of inputs by the job worker, as claimed by the department. The department argued that evidence from the Bhilad Check Post indicated that trucks mentioned in the invoices were not passed through the check post, suggesting that goods were not transferred from the supplier to the job worker. Additionally, discrepancies in goods description, such as invoices stating SSCR Coil while the job worker claimed to have received Patta/Patti, were highlighted as reasons for denying the CENVAT credit.

The appellant, through their counsel, submitted that they had provided Octroi receipts for almost 19 invoices, linking them to the availed credit. They argued that the discrepancy in goods description did not invalidate the credit claim, as Patta/Patti received in coil form aligned with the description on the invoices. The appellant contended that since the inputs were sent to the job worker for manufacturing, the appellant's lack of direct manufacturing activity did not disqualify them from claiming CENVAT credit. The importance of Octroi receipts as crucial evidence to establish goods transfer was emphasized by the appellant.

The Revenue, represented by the Superintendent, reiterated the findings of the impugned order, emphasizing the non-passage of trucks through the Check Post and the discrepancy between goods received and goods mentioned in the invoices. The Revenue supported their stance with the statement of the job worker, highlighting the difference in received goods from the invoiced items.

Upon careful consideration, the Tribunal found that the report from the Bhilad Sales Tax Check Post conflicted with the Octroi receipts provided by the appellant. The Tribunal criticized the adjudicating authority for dismissing the Octroi receipts, stressing the importance of such government-issued evidence. Regarding the discrepancy in goods description, the Tribunal reasoned that the variation did not conclusively prove non-receipt of invoiced goods by the job worker. The Tribunal clarified that under Rule 4(5)(a) of the CENVAT Credit Rules, the appellant's lack of direct manufacturing activity did not bar them from claiming credit if the job worker processed goods were cleared upon payment of duty. The Tribunal directed the Adjudicating Authority to reconsider the case, emphasizing the acceptance and verification of vital evidence, including Octroi receipts, to make a well-informed decision. Consequently, the impugned order was set aside, and the appeals were allowed for further review by the Adjudicating Authority.