2016 (12) TMI 581 - AT - Central Excise

CENVAT credit - clandestine removal - job-work - denial of credit on the ground that the goods never received in the factory of the appellant - Held that - the facts that the goods have been sent directly to the job worker on the instruction of the appellant by the supplier or to the job worker s premises from the port on account of the appellant and job worked goods have been received by the appellant after processing are not in dispute, therefore, we are of the view that as the goods have been received by the appellant after processing on job work, the cenvat credit cannot be denied to the appellant in the light of the decision of this Tribunal in the case of Bharat Heavy Electricals Limited vs. CCE, Bhopal 2011 (7) TMI 974 - CESTAT, NEW DELHI wherein this Tribunal held that The fact that the job worker has processed the material and sent the intermediate goods manufactured using the inputs following Notification No. 214/86 has not been refuted. In the given facts and circumstances of the case, the transport of material directly to the job worker s premises to avoid payment of extra period and same time, cannot lead to denial of credit. It has not been disputed that job work goods received by the appellant, the cenvat credit cannot be denied to the appellant - CENVAT credit allowed - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Appeal against denial of cenvat credit on inputs.

Analysis:
The appellant, engaged in manufacturing detergent products, availed cenvat credit on inputs during the disputed period. The appellant procured inputs from the market and sent them directly to a job worker, with invoices showing consignment to the job worker's premises on the appellant's account. The job worker processed the goods and returned them to the appellant for manufacturing final products. However, the Revenue contended that since the goods were not received at the appellant's factory, cenvat credit was denied, leading to duty demand, interest, and penalties. The appellant argued that they followed the procedure under Rule 4(5)(a) of the CCR, 2004, and cited precedents to support their claim.

The Tribunal noted that the goods were sent to the job worker on the appellant's instruction and received back after processing, which was undisputed. Relying on previous decisions, the Tribunal held that as long as the goods were received after processing on job work, cenvat credit could not be denied. The Tribunal referred to a case involving Bharat Heavy Electricals Limited and another involving Procter & Gamble to support its decision. The Tribunal emphasized that the direct transport of goods to the job worker's premises did not warrant denial of credit, especially when the job worker processed the materials as per regulations.

In light of the precedents and the undisputed receipt of job work goods by the appellant, the Tribunal concluded that the appellant was entitled to cenvat credit. Consequently, the impugned order denying the credit was set aside, and the appeal was allowed with consequential relief.