2017 (12) TMI 380 - AT - Central Excise

CENVAT credit - job-work - Remission of duty - goods destroyed by fire - the intermediate goods sent to Job Worker were not returned even after stipulated period of 180 days in terms of Rule 4 (5)(a) of the CCR, and subsequently got destroyed by fire - Held that - reliance placed in the case of COMMISSIONER OF CENTRAL EXCISE, CHENNAI-IV Versus FENNER INDIA LTD. 2014 (11) TMI 704 - MADRAS HIGH COURT , where it was held that when the inputs are destroyed in the fire accident, the assesse cannot be called upon to reverse the credit when there is no dispute that inputs on which credit was availed were destroyed when the work was in progress - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Appeal against order upholding rejection of appellant's appeal by Commissioner.
2. Non-return of intermediate goods sent for job work within stipulated period.
3. Claim for remission of duty due to fire accidents at job worker's premises.
4. Demand for reversal of Cenvat credit, interest, and penalty by original authority.
5. Appellant's submission on impossibility of returning destroyed goods.
6. Applicability of judicial precedents on similar issues.
7. Pending remission application and requirement for credit reversal.

Analysis:
1. The appeal pertains to the rejection of the appellant's appeal by the Commissioner, upholding the order-in-original demanding reversal of Cenvat credit, interest, and penalty due to non-return of intermediate goods sent for job work within the prescribed 180 days period under Rule 4(5)(a) of the Cenvat Credit Rules (CCR).

2. The appellant's claim for remission of duty following fire accidents at the job worker's premises led to a Show Cause Notice demanding reversal of Cenvat credit amounting to &8377; 13,25,347/- along with interest and penalty under section 11AC of the Central Excise Act and Rule 15(2) of CCR, which was confirmed by the original authority invoking the extended period.

3. The appellant argued the impossibility of returning destroyed goods and cited judicial precedents such as CCE-Chennai-IV Vs. Fenner India Ltd., M/s. Alchemie Laboratories Vs. CCE, Thane-I, and Monarch Self Adhesive Tapes and Foams India Pvt Ltd. to support their position that the right to take credit on inputs used in intermediate goods is indefeasible.

4. The Learned AR reiterated the findings of the impugned order, acknowledging the destruction of goods in the fire accidents but highlighting that the remission application was pending, and if allowed, the appellant would be required to reverse the credit.

5. The Tribunal, after considering submissions and cited judgments, found the precedents applicable to the case, notably citing the decision in CCE, Chennai-III Vs. Indchem Electronics and Commissioner Vs. Spectra Specialities, where it was held that reversal of credit on inputs used in intermediate goods destroyed in fire accidents was not required. The Tribunal set aside the impugned order, allowing the appeal of the appellant with consequential relief, if any.