2019 (4) TMI 1144 - AT - Central Excise

CENVAT credit - inputs contained in the waste and scrap generated in the premises of the job worker not received back along with job-worked goods - Rule 57AC(5)(a) and Rule 4(5)(a) of CENVAT Credit Rules, 2002/2004 - HELD THAT - The input that has been removed to premises of the job-worker after undertaking necessary job-work is required to be returned within 180 days from the date of such removal of the inputs to jobworker. However, under the said Rules there is no mention about return of the waste and scrap, if any, generated in the premises of the job-worker. Since the provision relating to return of waste and scrap generated in the premises has been deleted in the year 2000 and under the new provisions, no such stipulation is mentioned, therefore, it can safely inferred that CENVAT credit cannot be disallowed, on the quantity attributed to waste and scrap generated in the premises of the job-worker. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Appeal against Order-in-Appeal denying CENVAT credit for waste and scrap generated in job-worker premises.
- Interpretation of Rule 57AC(5)(a) and Rule 4(5)(a) of CENVAT Credit Rules, 2002/2004 regarding return of inputs from job-worker premises.

Analysis:
The case involved an appeal against an Order-in-Appeal denying CENVAT credit for waste and scrap generated in job-worker premises. The appellant cleared iron and steel products to job-workers under relevant rules but did not receive the exact quantity back due to generation of scrap and waste. The Revenue proposed to deny proportionate CENVAT credit attributable to the waste and scrap not returned. The appellant argued that the requirement for return of waste and scrap was deleted post-2000, and no specific stipulation existed for such return in the relevant Rules. They cited precedents to support their claim.

The Tribunal examined whether the appellant was required to reverse proportionate CENVAT credit for inputs contained in waste and scrap not received back from job-worker premises. Rule 57AC(5)(a) and Rule 4(5)(a) of CENVAT Credit Rules were analyzed. The Rules mandated return of inputs within a specified period but did not address the return of waste and scrap generated in job-worker premises. The appellant contended that since the provision for return of waste and scrap was deleted in 2000 without a replacement, denying CENVAT credit for such waste and scrap was unwarranted. The Tribunal agreed, citing a similar Board Circular from 2000, and set aside the impugned order, allowing the appeal with consequential relief as per law.

In conclusion, the Tribunal ruled in favor of the appellant, holding that denial of CENVAT credit for waste and scrap generated in job-worker premises was contrary to the relevant Rules due to the absence of a stipulation for their return. The decision highlighted the importance of interpreting the Rules in line with their explicit provisions and historical context, ultimately providing relief to the appellant in this case.