2024 (3) TMI 752 - AT - Central Excise

Reversal of Cenvat credit in terms of Rule 4(5)(a) of CCR, 2004 - appellant has not received back goods sent to the job worker within the stipulated period of 180 days in terms of Rule 4(5)(a) of CCR - HELD THAT - The provisions of Rule 4(5)(a) of CCR are attracted only when raw material or partially processed raw material are sent to the job work or for further processing, etc. But where the manufacturer has manufactured finished goods/intermediate goods, which have been sent for job work, the provisions of Rule 4(5)(a) are not attracted, as in such case, at best, the rate of duty as per Central Excise Tariff will be applicable. The provisions of Rule 4(5)(a) are not attracted in the facts and circumstances of the present case. Accordingly, impugned order is set aside and appeal is allowed. Appellant shall be entitled to consequential benefits, in accordance with law. As appeal is allowed on merits, the ground of limitation is left open. Appeal allowed.

Summary

Issues involved:
The issue involved in this Appeal is whether the appellant/assessee was required to reverse Cenvat credit in terms of Rule 4(5)(a) of CCR, 2004.

Details of the Judgment:

1. Background and Audit Findings:
The appellant, a PSU under the Ministry of Defence, was found to have not received back goods sent to the job worker within the stipulated period of 180 days, resulting in a demand for reversal of Cenvat credit. The audit noted discrepancies for multiple job work challans totaling Rs.5,92,22,981.

2. Appellant's Response and Subsequent Actions:
The appellant responded by stating that they had received all goods sent for job work, albeit with some delays. They reversed an amount of Rs.19,14,774 for specific challans. However, a show cause notice (SCN) was issued after an extended period, demanding reversal of Cenvat credit with interest and penalty.

3. Adjudication and Appeal:
The SCN was contested, leading to the confirmation of the demand, interest, and penalty. The matter was remanded once for verification of facts related to exempted goods. The Adjudicating Authority confirmed a demand of Rs.30,97,376 along with penalties and interest.

4. Arguments and Decision:
The appellant argued that Rule 4(5)(a) of CCR is not applicable as they sent finished or intermediate goods for job work, not raw materials. The Tribunal found in favor of the appellant, stating that the rule is only applicable to raw or partially processed materials sent for further processing, not finished goods. The appeal was allowed, and consequential benefits were granted.

5. Conclusion:
The Tribunal set aside the impugned order, allowing the appeal and granting consequential benefits to the appellant. The provisions of Rule 4(5)(a) were deemed not applicable in this case, and the ground of limitation was left open for further consideration.