2016 (12) TMI 1054 - AT - Central Excise

CENVAT credit - job work - inputs sent to job workers factory from the sellers premises - inputs not received back - Held that - I find that originally the notice alleged denial of credit on the ground that the inputs were not received directly in the assessees factory and were sent to the job workers premise. There is no issue of non-receipt of goods back from the job worker factory within 180 days. When the attention of the authorities were drawn to the provisions of Rule 4(5)(a) of the Cenvat Credit Rules which permit such sending of inputs to the job workers factory for processing, the Revenue shifted its stand and denied the credit on the ground that there is no evidence of receipt back of goods within a period of 180 days. When the above allegation was not the subject matter of the show cause notice, there is no requirement on the part of the assessee to produce the evidence to that effect. Further, the Commissioner (Appeals) by observing so, has travelled beyond the show cause notice, which is not permissible. As such, I am of the view that there being no such allegation of non-receipt of goods from the job worker, the denial of credit to the appellant is not justified. Apart from above that credit was availed by the appellant on 2010-2011 whereas show cause notice stands issued on 14.1.2013, by invoking the longer period of limitation. The credit was availed by the appellant by reflecting the same in statutory documents and there is no evidence of any positive suppression or misstatement on the part of the appellant reflecting upon any malafide on their part. As such, I am of the view that the demand is also barred by limitation. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Admissibility of Cenvat credit on inputs sent directly to job workers' factory, correlation of goods sent and received back, compliance with Rule 4(5)(a) of Cenvat Credit Rules, limitation period for issuing show cause notice.

Analysis:
The dispute in the appeal centered around the admissibility of Cenvat credit amounting to &8377; 75,964/- on inputs sent directly to the job workers' factory from the sellers' premises. The Revenue contended that the credit was not valid as the goods were not consigned to the appellant but to the job workers, and the goods were sent directly to the job worker without being brought to the appellant's factory. However, the Commissioner (Appeals) noted discrepancies in the quantities of materials sent and received back, with the appellant explaining the difference as scrap generation and burning loss. Despite this, the Commissioner upheld the denial of credit citing non-compliance with Rule 4(5)(a) of the Cenvat Credit Rules and rejected the plea regarding the limitation period.

The appellate tribunal found that the original notice did not raise the issue of non-receipt of goods back from the job worker's factory within 180 days, shifting the Revenue's stance during the proceedings. The tribunal emphasized that since the show cause notice did not specifically allege non-receipt within the stipulated time frame, the appellant was not obligated to provide evidence to that effect. The tribunal criticized the Commissioner (Appeals) for exceeding the scope of the notice and deemed the denial of credit unjustified due to the absence of such an allegation.

Moreover, the tribunal addressed the limitation period aspect, highlighting that the credit was availed in 2010-2011 while the show cause notice was issued in 2013, invoking an extended limitation period. However, since there was no evidence of deliberate suppression or misstatement by the appellant, the tribunal concluded that the demand was time-barred. Consequently, the tribunal set aside the impugned order, allowing the appeal both on its merits and on the grounds of the limitation period.

In summary, the appellate tribunal's judgment favored the appellant by overturning the denial of Cenvat credit, emphasizing the lack of specific allegations in the original notice, and ruling the demand as time-barred due to the absence of malafide intent on the appellant's part.