2018 (9) TMI 904 - AT - Central Excise

CENVAT Credit - inputs - halogen bulbs with the brand name OSRAM - denial on account of nexus - Held that - The appellant is engaged in the manufacture of Automobile head lamps. One of the inputs required for such manufacture of head lamps is the halogen bulbs. Accordingly there is no doubt that the halogen bulbs are eligible to be considered as inputs and the cenvat credit on such goods will be available in terms of the definition of inputs in Rule 2 (k) of the Cenvat Credit Rules, 2004 - credit allowed. Clearance of inputs as such - reversal of credit - Held that - For the clearance of such inputs outside the factory as such without use in the manufacture, invoices have been used and the cenvat credit availed on inputs stands reversed at the time of such clearance - The appellant having debited the cenvat credit availed on the inputs, Revenue is not justified in asking for repayment of such cenvat credit alongwith interest and penalties. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on halogen bulbs with the brand name "OSRAM"
- Reversal of cenvat credit at the time of clearance of inputs
- Dispute regarding the use of halogen bulbs in the manufacture of head lamps

Analysis:

1. Availment of cenvat credit on halogen bulbs with the brand name "OSRAM"
The appellant's factory, engaged in manufacturing Automobile Head lamps, procured halogen bulbs, including from a sister concern with the brand name "OSRAM." The department alleged that these bulbs were not used in manufacturing head lamps but cleared to another entity. The issue was whether the cenvat credit availed on these bulbs was legitimate.

2. Reversal of cenvat credit at the time of clearance of inputs
The appellant argued that when inputs were diverted without use in the factory, the cenvat credit was fully reversed at the time of such clearance. Proper documentation was maintained for receipt of goods. The appellant contended that since the credit was reversed at the time of removal, there was no justification for further demanding the cenvat credit.

3. Dispute regarding the use of halogen bulbs in the manufacture of head lamps
The Revenue contended that the halogen bulbs with the brand name "OSRAM" were not intended for use in manufacturing head lamps with the brand name "Autolite." They argued that the goods were re-routed and ultimately meant for a different buyer, not for use as inputs in the factory. However, the appellant maintained that the documentation proved the receipt and reversal of cenvat credit at the time of clearance, satisfying the cenvat credit rules.

In the judgment, it was established that halogen bulbs were indeed eligible as inputs for the manufacture of head lamps, and the cenvat credit availed on such goods was found to be legitimate. The appellant's practice of procuring inputs from various suppliers, including "OSRAM," and reversing the credit at the time of clearance was deemed compliant with the cenvat credit rules. The tribunal found no fault in the transactions and set aside the impugned order, allowing the appeal.