2018 (12) TMI 542 - AT - Central Excise

CENVAT Credit - duty paid by the job worker - Held that - Hon ble Gujarat High Court in the case of Rohan Dyes & Intermediates Ltd 2013 (4) TMI 277 - GUJARAT HIGH COURT , in identical issue has held that the Tribunal rightly rejected the contention of the Revenue that the respondents should have reversed the Cenvat credit taken before sending the goods to the job worker since the job worker had not followed the procedure of job work - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand of reversal of cenvat credit, interest, and imposition of penalty.

Confirmation of demand of reversal of cenvat credit:
The appeal was filed against the confirmation of demand of reversal of cenvat credit, interest, and penalty. The appellant had cleared raw material after availing cenvat credit to the job worker, who paid duty on the intermediate product. The appellant then claimed credit for the duty paid by the job worker. The counsel for the appellant argued that the issue was covered by a decision of the Hon'ble Gujarat High Court in a previous case. The Tribunal referred to the decision and observed that according to the modvat scheme, the modvat of the final product should include the cost of inputs, allowing for modvat credit at the time of final product clearance. The Tribunal rejected the Revenue's contention that the appellant should have reversed the cenvat credit before sending goods to the job worker, as the job worker had not followed the job work procedure. Citing the previous decision, the Tribunal allowed the appeal based on the principles established by the Hon'ble Gujarat High Court.

Imposition of penalty:
The issue of imposition of penalty was intertwined with the confirmation of demand for reversal of cenvat credit. The Tribunal's decision to allow the appeal based on the principles established by the Hon'ble Gujarat High Court also impacted the imposition of penalty. By rejecting the Revenue's contention regarding the reversal of cenvat credit before sending goods to the job worker, the Tribunal indirectly addressed the issue of penalty imposition. The Tribunal's decision provided clarity on the application of modvat scheme principles and the procedure for claiming cenvat credit in cases involving job workers, thereby influencing the imposition of penalty in this context.

Interest implications:
Although not explicitly discussed in the judgment, the issue of interest implications could be inferred from the confirmation of demand for reversal of cenvat credit and the subsequent allowance of the appeal. The decision to allow the appeal based on the principles established by the Hon'ble Gujarat High Court would likely have implications for any interest calculations related to the cenvat credit reversal. The Tribunal's ruling on the core issue of cenvat credit reversal and the application of modvat scheme principles would have a consequential impact on any interest calculations associated with the reversal process. Therefore, the interest implications were indirectly addressed through the Tribunal's decision on the primary issue of cenvat credit reversal and the subsequent appeal allowance.