2016 (8) TMI 588 - AT - Central Excise

Whether the Appellants are eligible to pay duty by debitting CENVAT Credit account on the waste and scrap generated during the course of job work - Held that - I do not find substance in the contention of the Revenue that the Appellant cannot utilize the credit availed on the inputs received and used in the manufacture of their own goods, for discharging the duty on waste and scrap generated during the course of job work i.e. goods belonging to other manufacturer , in much as there is no one to one co-relation between the input and output while discharging duty on the waste and scrap. Also, it is found that for the subsequent period, the learned Commissioner (Appeals) has accepted the payment as valid and allowed the appeal of the appellant. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Eligibility to pay duty using CENVAT Credit on waste and scrap generated during job work.

Analysis:
The appeal was filed against an order passed by the Commissioner, alleging incorrect payment of duty through debiting the CENVAT Credit account for waste and scrap generated during job work. The Appellants, engaged in manufacturing crankshaft/camshaft parts, received materials without duty payment under a notification. The Department issued demand notices for recovery of duty, which were confirmed by the Adjudicating authority and upheld by the Commissioner (Appeals), leading to the present appeal.

The Appellant argued that the issue of duty payment through CENVAT Credit for job worked goods is settled by Tribunal decisions and cited a specific case in support. They also highlighted that in a subsequent period, the Commissioner (Appeals) accepted such payment as valid in their own case. The Authorized Representative reiterated the Commissioner (Appeals)' findings.

The Member (Judicial) analyzed the matter, focusing on the eligibility of the Appellants to pay duty using CENVAT Credit on waste and scrap from job work. The Revenue contended that credit on inputs used in manufacturing own goods cannot be used for waste and scrap from job work. However, the Member disagreed, stating there is no direct correlation between input and output in such cases. Referring to a previous Tribunal decision, it was noted that denying credit for waste and scrap clearance during job work is unwarranted. Considering the Commissioner (Appeals)' acceptance of similar payment in a subsequent period, the impugned order was found lacking in merit, leading to its setting aside and allowing the appeal with appropriate relief.

In conclusion, the judgment clarified the eligibility of utilizing CENVAT Credit for duty payment on waste and scrap generated during job work, emphasizing the lack of necessity for a direct input-output correlation in such scenarios. The decision was based on legal precedents and the specific circumstances of the case, ultimately ruling in favor of the Appellants and providing relief accordingly.