2024 (10) TMI 1057 - AT - Central Excise

CENVAT Credit - duty on process loss during job work - case of the department is that in the process there is loss and on such quantity of process loss the duty is required to be paid - HELD THAT - The issue in hand has been decided by this Tribunal in the various cases of the appellant itself. One of the decision which referred to earlier decision in the appellant s case M/S VOLTAMP TRANSFORMERS LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, VADODARA 2013 (2) TMI 337 - CESTAT AHMEDABAD where it was held that ' In the present case, the loss on account of waste and scrap is only 2% which has not been argued to be unreasonable by the Revenue. It is also not the case of the Revenue that waste and scrap generated has been clandestinely removed or that no waste and scrap is generated at all in the processes undertaken by the Job worker of the appellant. There is also no binding clause in Rule 4(5)(a) of CENVAT Credit Rules, 2004 that any loss of inputs by generation of waste and scrap has to be compensated by reversing equivalent credit taken on the virgin metal.' The impugned order is set aside and appeal is allowed.

Summary

Issues:
Interpretation of Cenvat credit rules regarding duty payment on process loss during job work.

Analysis:
The case involved a dispute regarding duty payment on process loss during job work. The appellant availed Cenvat credit for job work where paper insulation process was carried out by the job worker, resulting in a total weight return equivalent to the input supplied by the appellant. The department argued that duty should be paid on the process loss. The appellant cited previous tribunal decisions in their own case to support their position that duty is not required on process loss. The tribunal noted that the issue had been previously decided in the appellant's favor. The tribunal referenced various judgments, including one where it was held that duty liability for waste and scrap generated during job work falls on the job worker, not the raw material supplier. The tribunal also highlighted that there was no binding clause requiring compensation for process loss by reversing credit taken on the virgin metal. Ultimately, the tribunal allowed the appeal and set aside the impugned order, concluding that the issue was no longer res integra based on previous decisions in the appellant's own case.

This comprehensive analysis of the judgment showcases the interpretation and application of Cenvat credit rules in determining duty liability on process loss during job work. The tribunal's reliance on previous decisions and legal principles highlights the importance of consistency and precedent in resolving such disputes. The detailed reasoning provided by the tribunal ensures a thorough understanding of the legal issues involved and the basis for the final decision.