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2023 (11) TMI 4 - AT - Central ExciseCENVAT Credit - removal of 'moulds' as such or deployment with the vendors / job workers - removal of epoxy moulds to manufacturer of parts of automobile seats as such - permissibility of such transfers without reversal of CENVAT credit prior to such incorporation - rule 3(5) of CENVAT Credit Rules, 2004 - HELD THAT - It is found that rule 9(3) of CENVAT Credit Rules, 2004, relating to inputs or capital goods removed as such requires issue of invoice referred to in rule 9 of CENVAT Credit Rules, 2004 which does not apply to the present facts inasmuch as moulds are not sold to the vendors. The removal of such moulds to job-worker admittedly governed by rule 4(5) of CENVAT Credit Rules, 2004, permits retention of credit for a time and reversal upon completion of deadline till such time when the goods are not returned to the principal manufacturer - the submission cannot be accepted that the incorporation of 2010 to cover removal to another manufacturer or job-worker is not clarificatory in nature especially as rule 4(5)(a) of CENVAT Credit Rules, 2004, intended for such clearance to the job-worker, finds mention again in rule 4(5)(b) to cover situations of such not being returned to the principal manufacturer. The impugned order set aside - matter remanded back to the original authority for fresh determination on ascertainment of facts relating to the transactions - appeal disposed off by way of remand.
Issues involved:
The judgment involves the remnant demand of Rs. 19,16,372 under rule 14 CENVAT Credit Rules, 2004, along with applicable interest and penalty, related to the removal of 'epoxy moulds' to manufacturer of 'parts of automobile' seats that were returned for final assembly into finished products supplied to another company during 2008-09 and up to 27th February 2010. Issue 1: Eligibility of CENVAT credit for supplies to job-workers The central excise authorities contended that the 'moulds' had been removed 'as such', making the credit taken ineligible. However, the appellant argued that the 'epoxy moulds' were used by their vendors in the manufacture of goods, and the eligibility for credit in relation to such supplies to 'job-workers' is not in doubt. They cited precedents to support their contention. Issue 2: Interpretation of rule 4(5)(b) of CENVAT Credit Rules, 2004 The appellant contended that the clarification in rule 4(5)(b) with effect from 27th February 2010 rendered them eligible for credit even for the disputed period. They argued that the distinction made in previous cases and the clearance of 'moulds' under cover of challan established the vendors as 'job-workers'. Issue 3: Definition of 'job-worker' and applicability of CENVAT Credit Rules The first appellate authority determined that the transfer of 'moulds' without reversal of credit is permissible only when such supplies are made to 'job-workers'. The definition of 'job-work' in CENVAT Credit Rules, 2004 precludes the arrangement between the appellant and the vendors due to not receiving any raw materials or semi-finished goods from the appellant. Issue 4: Compliance with CENVAT Credit Rules and applicability of rule 9(3) The judgment analyzed the provisions of rule 4(5)(b) permitting transfers to 'job-workers' and the requirement of invoice under rule 9(3) for inputs or capital goods removed 'as such'. The judgment emphasized the importance of compliance with the rules and the clarificatory nature of the 2010 incorporation. Conclusion: The tribunal set aside the impugned order and remanded the matter back to the original authority for fresh determination on the facts relating to the transactions, highlighting the need for proper ascertainment before recovery of ineligible credit. The appeal was disposed of accordingly.
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