2006 (5) TMI 7 - AT - Central Excise

Central Excise Cenvat credit Job work Input destroyed in the job workers premises Remission of duty

Summary

Issues:
1. Claim for remission of duty under Rule 21 of the Central Excise Rules, 2002.
2. Demand of Cenvat credit availed on inputs and intermediate products.
3. Interpretation of rules regarding credit denial on destroyed inputs.
4. Precedence of Tribunal decisions over remission granted by competent authority.

Analysis:
Issue 1: The appellant filed a claim for remission of duty under Rule 21 of the Central Excise Rules, 2002 due to a fire accident destroying inputs and intermediate products. The Commissioner allowed remission of duty but demanded Cenvat credit availed on the inputs and intermediate products.

Issue 2: The appellant argued that once inputs are issued for manufacturing, credit cannot be denied, citing relevant Tribunal decisions. They emphasized that the modvat credit should not be reversed since the inputs were sent for job work and not claimed for insurance regarding the duty amount involved in the destroyed inputs.

Issue 3: The Tribunal referred to a decision in the case of Mafatlal Industries Vs. Commissioner, stating that where remission is granted, credit on inputs cannot be allowed. However, the Tribunal also considered the Supreme Court's decision in the case of Commissioner, Central Excise, Chennai Vs. Indchem Electronics, which upheld that modvat credit is not deniable on inputs destroyed in a fire accident when issued for manufacture.

Issue 4: The Tribunal concluded that since the inputs were sent to job workers and considered as issued for manufacture, the Supreme Court's decision in the case of Indchem Electronics takes precedence over the division bench Tribunal decision. Therefore, the appeal was allowed, setting aside the Commissioner's order.

This detailed analysis of the judgment showcases the interpretation of rules, relevant case laws, and the precedence of higher court decisions in resolving the issues raised by the appellant regarding remission of duty and denial of Cenvat credit.