2016 (11) TMI 231 - AT - Central Excise

Reversal of Cenvat Credit - job-work - payment of an amount equal to cenvat credit attributable to the inputs which were not received back from the job worker - Held that - the department did not identify which type of inputs were retained by the job worker, it is not at all tenable to invoke Cenvat Credit Rules, 2004 to demand and recover certain amount of credit. The proceedings against the respondent are devoid of merit as well as hit by time bar. The present appeal against the impugned order has no merit - appeal dismissed - decided against Department.

Summary

Issues involved:
- Interpretation of Cenvat Credit Rules, 2004 regarding duty demand on inputs sent for job work.
- Validity of duty demand under Rule 14 of Cenvat Credit Rules, 2004.
- Time limitation for raising duty demand.
- Applicability of Central Excise Rules, 2002 in determining duty demand.

Analysis:
1. The case involved a dispute where the Revenue appealed against an order by the Commissioner (Appeals) regarding a duty demand of &8377; 47,08,097 made on the respondent-assessee for allegedly violating the Cenvat Credit Rules, 2004 by not paying the amount equal to the cenvat credit attributable to inputs not received back from a job worker. The Revenue contended that duty attributable to the value of copper residue not received back should be recoverable under Rule 14 of the Cenvat Credit Rules, 2004.

2. The Tribunal noted that the appeal by the Revenue lacked legal or factual basis, as the impugned order by the Commissioner (Appeals) highlighted discrepancies in the demand calculation. The Commissioner found that the demand was worked out based on tolling charges deducted by the appellant, which did not represent the cenvat credit attributed to the inputs retained. Additionally, it was observed that the goods sent for job work and retained by the job worker were waste and scrap, not input or capital goods, leading to a conclusion that the demand should have been made under the Central Excise Rules, 2002, instead of the Cenvat Credit Rules, 2004.

3. The Commissioner also ruled that the demand was time-barred, as the show-cause notice (SCN) issued beyond the period of limitation did not involve provisions for allegations of willful misstatement, collusion, or fraud to attract the proviso to Section 11A(1) of the Act. The absence of such allegations in the SCN rendered the demand time-barred, as per the legal requirements.

4. Ultimately, the Tribunal found that the department failed to identify the specific inputs retained by the job worker, making it untenable to demand and recover a certain amount of credit under the Cenvat Credit Rules, 2004. Consequently, the proceedings against the respondent were deemed meritless and time-barred. The appeal by the Revenue was dismissed, and the cross-appeal filed by the respondent was also disposed of accordingly.