2018 (5) TMI 390 - AT - Central Excise

CENVAT credit - input was received in the factory of the job-worker but not in the factory of the appellant manufacturer - Held that - CENVAT Credit is allowed not only on the input received in the factory of the manufacturer of the final product but also the input used in the manufacture of intermediate product by a job-worker availing the benefit of exemption under N/N. 214/86-CE dated 25.3.1986 - in respect of the inputs used in the premises of the job-worker, the CENVAT Credit is admissible - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Denial of CENVAT Credit on invoices issued by job worker for chemicals used in processing.

Analysis:
The case involves a manufacturer of paper and paper board availing CENVAT Credit under Rule 3 of the CENVAT Credit Rules, 2002. The manufacturer sends goods to a job worker for processing and clearance on payment of duty from the job worker's premises. The job worker purchases chemicals and inputs, uses them in processing, and then issues an invoice to the manufacturer to pass on the CENVAT Credit. The Assistant Commissioner issued a show cause notice proposing denial of CENVAT Credit on these invoices, leading to confirmation of demand, interest, and penalty by the adjudicating authority. The Commissioner (Appeals) upheld the denial, stating that credit can only be availed on inputs received in the manufacturer's factory, not the job worker's. The manufacturer appealed, arguing that the manufacturing processes at the job worker's premises were on their behalf, citing relevant decisions and a previous Tribunal ruling in their favor.

The Tribunal analyzed the provisions of Rule 3(1) of the CENVAT Credit Rules, 2002, which allow CENVAT Credit on inputs used in the manufacture of final products, including those used in the premises of a job worker. The Tribunal noted that the inputs for which the job worker issued invoices were indeed used in the manufacturer's final product subject to excise duty, making the CENVAT Credit admissible. Citing specific provisions and previous rulings, the Tribunal found that the CENVAT Credit availed by the manufacturer was in order and clearly permissible. Consequently, the Tribunal set aside the impugned order and allowed the appeals in favor of the manufacturer.

In conclusion, the Tribunal's judgment revolved around the admissibility of CENVAT Credit on inputs used in processing by a job worker for the manufacturer's final product. By interpreting Rule 3(1) of the CENVAT Credit Rules, the Tribunal determined that the manufacturer was entitled to the credit, overturning the lower authorities' denial. The decision emphasized the specific provisions allowing credit in such scenarios and highlighted previous rulings supporting the manufacturer's position, ultimately leading to a favorable outcome for the appellant.