2015 (10) TMI 129 - AT - Central Excise

Denial of CENVAT Credit - Furnace Oil - Notification No. 214/1986 dtd 25.3.1986 - Held that - Furnace oil used in the manufacture of final product cleared on job work material under exemption Notification No 214/86-CE. The Commissioner (Appeals) observed that the appellant cannot take the cenvat credit of inputs, which has been used in the manufacture of goods cleared under the exemption notification. I find that the appellants own case as reported in 2009 (5) TMI 734 - CESTAT, AHMEDABAD on the identical facts allowed the appeal on identical issue - So, the appellant is eligible to avail cenvat credit on merit and the finding of the Commission (Appeals) is not sustainable - Decided in favour of assessee.

Summary

Issues:
1. Reversal of cenvat credit on furnace oil used in job work material.
2. Request for re-credit of the reversed amount.
3. Commissioner's decision on eligibility for cenvat credit.
4. Comparison with earlier Tribunal decisions.
5. Requirement of refund claim under Section 11B of the Central Excise Act.
6. Applicability of Larger Bench decision in BDH Industries Ltd case.
7. Appellant's eligibility for cenvat credit and permission for re-credit.

Analysis:

1. The Appellants, engaged in manufacturing Articles of Iron and Steel, availed cenvat credit on Furnace Oil used in the manufacture of dutiable goods and job work material. They wrongly reversed cenvat credit on the oil used in job work material and requested permission to re-credit the amount. A Show Cause Notice was issued, questioning the re-credit permission. The Adjudicating Authority rejected the request, leading to an appeal.

2. The Appellant's Advocate argued that the reversal was erroneous and requested re-credit, citing the use of furnace oil for job work cleared under an exemption notification. Referring to earlier Tribunal decisions, the Advocate contended that the Appellant should be eligible for cenvat credit on inputs used in job work.

3. The Revenue's Representative argued that the re-credit permission should be rejected as no refund claim under Section 11B was filed. The Commissioner's decision upheld the rejection based on the exemption notification for goods cleared under job work.

4. Upon review, the Judge found that the Appellant's case in an earlier Tribunal decision supported their appeal, emphasizing the duty payment condition by the principal manufacturer for job work. The Judge disagreed with the Commissioner's observations and set aside the decision, allowing the Appellant to avail cenvat credit.

5. The Judge clarified that the Larger Bench decision in BDH Industries Ltd case, cited by the Revenue, was not applicable to the current case as the Appellant sought re-credit, not suo moto credit. The Judge agreed with the Appellant's submission that the Commissioner did not dispute the re-credit application.

6. Consequently, the Judge set aside the impugned orders, allowing the Appellant's appeal and granting consequential relief. The decision highlighted the Appellant's eligibility for cenvat credit and the permission for re-credit, based on the Tribunal's earlier decision and the specific circumstances of the case.