2023 (2) TMI 439 - AT - Central Excise

Irregular availment of CENVAT Credit - input - it is alleged that the descriptions in invoices referred by the learned Counsel for the appellant are not showing very same goods since descriptions in each invoices varies and the impugned order is sustainable as per Section 11(A)(9) of Central Excise Act 1944 - HELD THAT - On going through the findings given by the Appellate Authority where it is highlighted that the invoices relied upon by the appellant is not reflecting same goods. But there is no dispute that the Bare Copper Strips with description Sample ED-192 if cut out into small pieces during the initial process of manufacture was rejected at very beginning of manufacturing. If so same cannot be invoice as in the very same description. Though there is a slight discrepancy in the description in invoices it is an admitted fact that Copper of 1028.8 Kgs were supplied by suppliers it was returned for Job work due to defect and on completion of Job work it is sent back to the appellant for further processing vide Invoice dated 03.02.2017 by charging only the labour charges. Moreover during investigation there is no discrepancy pointed out regarding the stock of raw material maintained by the appellant and the return submitted for the relevant period shows proper transaction of said material as claimed by the appellant. There are no reason to allege that the appellant had availed ineligible CENVAT credit - appeal allowed.

Summary

Issues: Alleged irregular availment of CENVAT credit

Analysis:
The appellant, engaged in manufacturing Commutators and Bare Copper Strip/wire, faced proceedings for irregularly availing CENVAT credit of Rs.57,636. The appellant received Bare Copper Strip from a supplier, which was later found to generate excess waste during the manufacturing process. The rejected material was returned to the supplier with a Debit Note to account for the defective supply. The supplier was instructed to convert the strips to the required size on a JOB work basis. The material was returned to the appellant within 180 days, complying with Rule 4(5)(a) of the CENVAT Credit Rules 2004. The Department issued a Show Cause Notice (SCN) demanding recovery of the irregularly availed credit. The appellant argued that under Rule 5A, if inputs are sent for re-conditioning and received back within 180 days, CENVAT credit should be allowed. Invoices and return documents supported the appellant's claim. The Department contended discrepancies in the invoice descriptions, but the Appellate Authority found that the rejected material was returned for Job work and then back to the appellant for further processing, supporting the appellant's compliance with the rules. The Appellate Tribunal allowed the appeal, finding no basis to allege ineligible CENVAT credit, granting consequential relief.

Conclusion:
The judgment addressed the issue of alleged irregular availment of CENVAT credit by the appellant in the context of returning rejected Bare Copper Strip for Job work within 180 days. The Tribunal's analysis focused on the compliance with CENVAT Credit Rules, supported by documentary evidence and the absence of discrepancies in the material transactions. The decision favored the appellant, allowing the appeal and providing relief based on the findings of proper adherence to the rules and procedures governing CENVAT credit availment.