2019 (8) TMI 203 - AT - Central Excise

CENVAT Credit - job-work - short receipt of goods supplied for job work - Rule 4 (5) (a) of the Cenvat Credit Rules, 2004 - duty was demanded under Section 11A of Central Excise Act, 1944. Ld. Commissioner (Appeals) though held that the demand was wrongly confirmed under section 11A, however, he has upheld the demand invoking Rule 4 (5) (a) - HELD THAT - We find that firstly it is not revealed from the entire case that whether the SCN has demanded duty treating the goods as input as such short received or, waste and scrap or finished goods, short receipt, therefore unless until the fact is clear, it cannot be decided that whether the demand is correctly liable under Rule 4(5) (a) or section 11A. The matter needs to be remitted back to adjudicating authority for deciding afresh that on which goods duty is liable on the short receipt, whether it is finished goods, waste and scrap or input as such - appeal allowed by way of remand.

Summary

Issues involved:
Whether duty is payable on the short receipt quantity of material supplied to a job worker for job work.

Analysis:
The appellant argued that the demand for duty on the short receipt material should have been made under Rule 4(5)(a) of the Cenvat Credit Rules, 2004, not under Section 11A. They cited various judgments in their favor to support their contention. The appellant emphasized that previous Tribunal decisions had consistently ruled in their favor on this issue. The appellant's counsel highlighted that the demand based on Section 11A was illegal, making the impugned order unsustainable.

The Revenue, represented by the Superintendent, maintained that the demand for duty on the short receipt quantity was correctly confirmed. They argued that the appellant was liable to pay duty under Rule 4(5)(a) / Notification No. 214/86-CE. The Revenue cited a Larger Bench decision in the case of Thermax Babcock & Wilcox Ltd Vs. CCE-Pune-I to support their position.

Upon reviewing the submissions and records, the Tribunal observed that duty was demanded under Section 11A, but the demand was incorrectly confirmed under this section. The Tribunal noted that it was unclear from the case whether the demand was for duty on goods treated as input, waste, scrap, or finished goods. Due to this ambiguity, the Tribunal decided to remand the case back to the adjudicating authority for a fresh decision. The Tribunal directed the adjudicating authority to determine the nature of the goods on which duty is liable for the short receipt and then decide under which provision the demand is sustainable. Consequently, the impugned order was set aside, and the appeal was remanded for further consideration.

This judgment highlights the importance of correctly applying the relevant provisions of the law when determining the liability for duty on short receipt quantities of materials supplied for job work. The Tribunal emphasized the need for clarity on the nature of the goods involved before confirming any duty demands, ensuring a fair and accurate assessment of the situation.