2018 (3) TMI 600 - AT - Central Excise

CENVAT credit - Rule 16 of Central Excise Rules, 2001 - case of the department is that since the appellant have received the goods under Rule 16 and availed the credit, only option under Rule 16 is to clear the repaired goods on payment of duty and there is no other option to clear without payment of duty - Held that - even though the credit is allowed under Rule 16 but it is provided in Rule 16, the credit is allowed as if under Cenvat Credit Rules. As regard cenvat credit the provisions of CENVAT Credit Rule is applicable. Once Cenvat Credit Rules is applicable, appellant is allowed to clear the input under Rule 4(5)(b) if the removal is for job work to the job worker - appeal allowed - decided in favor of appellant.

Summary

Issues: Availment of Cenvat Credit for capital goods received under Rule 16 of Central Excise Rules and clearance to job workers without payment of duty.

Analysis:
1. The appellant availed Cenvat Credit for capital goods received under Rule 16 of the Central Excise Rules, which allowed credit for goods brought for repairs or reconditioning. The department contended that since the goods were received under Rule 16, the only option was to clear them on payment of duty.

2. The appellant argued that Cenvat Credit Rules applied for the movement of goods on which credit was availed, citing Rule 4(5)(b) of Cenvat Credit Rules for the removal of capital goods for job work. They claimed that duty under Rule 16 was payable only if the goods were cleared other than for job work under Rule 4(5)(b), and that the demand was time-barred due to no suppression of facts.

3. The Revenue supported the findings of the adjudicating authority, maintaining the demand for duty payment and penalty.

4. The Tribunal analyzed Rule 16 of the Central Excise Rules, noting that although credit was allowed under Rule 16, it operated as if under Cenvat Credit Rules. As per the Cenvat Credit Rules, the appellant was permitted to clear the capital goods under Rule 4(5)(b) for job work without duty payment. Therefore, the Tribunal set aside the impugned order, ruling in favor of the appellant and allowing the appeal.

This judgment clarifies the application of Cenvat Credit Rules in conjunction with Rule 16 of the Central Excise Rules regarding the availment of credit for capital goods received for repairs and their clearance to job workers without payment of duty. The Tribunal's decision provides guidance on the correct interpretation and legal implications of these rules in such scenarios, ensuring compliance with the relevant provisions and setting a precedent for similar cases in the future.