2016 (1) TMI 920 - AT - Central Excise

Eligibility to take cenvat credit on 8 cavity mould for flip to cap sent to job worker without bringing the same into their factory - Held that - As under Rule-4(5)(b) moulds etc can be sent to the job worker but no condition, like its receipt back within 180 days etc as prescribed in Rule-4(5) (a) of the cenvat crdtit Rules -2004 is specified. The argument of the appellant , that such moulds may not be brought back by the appellant if it has exhausted its production capability, has got some force. The purpose of bringing the moulds first to the factory premises and then clearing the same to a job worker may not serve any purpose except for incurring some additional transportation cost to the appellant. It is an accepted norm that raw materials can also be directly sent to the job worker without being actually brought into the factory of an assessee. In view of the above observations & settled proposition of law appeal filed by the appellant is allowed with consequential relief, if any.

Summary

Issues involved: Eligibility of appellant to take cenvat credit on moulds sent to job worker without bringing them into factory premises.

Analysis:
The appellant filed an appeal against the order passed by Commissioner (Appeals-I) Kolkata upholding the denial of cenvat credit on moulds sent directly to a job worker without being brought into the factory premises. The appellant's advocate argued that as per Rule 4(5)(b) of the cenvat credit Rules 2004, credit can be taken for moulds without being received in the factory, and the condition of returning moulds within 180 days, as per Rule 4(5)(a), does not apply to moulds consumed at the job worker's place. The advocate cited a relevant case law to support the argument.

The Revenue's representative contended that the appellant did not inform about sending the moulds to the job workers and argued that the goods were never received in the factory premises, justifying the denial of credit.

The Tribunal considered the provisions of Rule 4(5)(a) and (b) of the cenvat credit Rules 2004. It noted that Rule 4(5)(b) allows for moulds to be sent to job workers without specifying conditions like returning within 180 days, as in Rule 4(5)(a). The Tribunal agreed with the appellant's argument that moulds need not be brought back if the production capability is exhausted, citing a relevant case law where it was held that the 180-day return condition does not apply to moulds sent to job workers.

The Tribunal opined that requiring moulds to be brought first to the factory premises before sending them to job workers would serve no purpose other than incurring additional transportation costs. It recognized that raw materials can be directly sent to job workers without entering the assessee's factory. Consequently, the Tribunal allowed the appeal filed by the appellant with any consequential relief.

In conclusion, the Tribunal ruled in favor of the appellant, emphasizing the applicability of Rule 4(5)(b) in allowing cenvat credit for moulds sent to job workers without being brought into the factory premises, based on the specific provisions and established legal principles.