2018 (1) TMI 480 - AT - Central Excise

CENVAT credit - CVD paid on the goods imported and delivered to them for further activity of job working - Held that - It is undisputed that the appellant is a job worker of Ajanta Pharma Ltd. of inputs which were imported under target plus scheme by filing different Bills of Entry were received and consumed by the appellant for manufacturing of final products which were subsequently transferred to Ajanta Pharma Ltd. who then exported the same as well as cleared the same for home consumption - denial of cenvat credit to the appellant being a manufacturer of final products seems to be incorrect. The benefit of Notification 73/2006 is for the importer who has complied with the conditions of target plus scheme. The said notification nowhere states that the inputs which are dispatched for manufacturing by the importer to their job workers, cenvat credit needs to be denied. Appeal allowed.

Summary

Issues:
Denial of cenvat credit on imported goods for job working under target plus scheme.

Analysis:
The appeal addressed the denial of cenvat credit to the appellant for the countervailing duty (CVD) paid on imported goods used for job working. The appellant, a job worker of a pharmaceutical company, received imported materials from the company under two sets of Bills of Entry. The first set indicated full customs duty discharge by the company, enabling the appellant to avail CVD credit. The second set, imported under the target plus scheme, faced objections for credit availing as the appellant's name was not on the Bill of Entry. The lower authorities upheld the denial, leading to a penalty. The first appellate authority allowed credit for the first set but denied it for the second, citing non-fulfillment of scheme conditions.

The departmental representative highlighted non-registration of the appellant as a supporting manufacturer under the scheme, deeming the credit ineligible. The Chartered Accountant argued that the appellant's role as a job worker justified credit availing, disputing misinterpretation of the scheme's conditions. The Tribunal found misdirection in the lower authorities' decisions, emphasizing the appellant's job working role for the pharmaceutical company. The denial of credit to a manufacturer of final products seemed incorrect, especially when the imported inputs were used for manufacturing and export by the company.

The Tribunal clarified that the scheme's conditions did not mandate denial of credit when imported goods were sent for manufacturing by the importer to their job workers, as in the current scenario. The condition regarding non-transfer or sale of goods did not apply as the imported inputs were used for conversion by the appellant as a job worker, not sold or transferred. Consequently, the denial of cenvat credit to the appellant was deemed incorrect, leading to the setting aside of the impugned order and allowing the appeal.