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of <h1>Tribunal Allows Cenvat Credit Transfer on Job Work Challans, Emphasizes Compliance</h1> <h3>SHINHAN PLASTO INDIA PVT. LTD. Versus COMMISSIONER OF C. EX., CHENNAI</h3> The Tribunal ruled in favor of M/s. Shinhan Plasto India Pvt. Ltd. (SPIPL) in the case concerning availing Cenvat credit on capital goods transferred ... - Issues involved: Interpretation of Rule 4(5)(a) of the Cenvat Credit Rules regarding availing Cenvat credit on capital goods transferred under job work challans, validity of supplementary invoices issued, recovery of duty paid, imposition of penalties.Interpretation of Rule 4(5)(a) of Cenvat Credit Rules:The case involved M/s. Shinhan Plasto India Pvt. Ltd. (SPIPL) availing Cenvat credit on capital goods transferred by M/s. Hyundai Motor India Ltd. (HMIL) under job work challans. HMIL initially transferred the goods without duty payment, later invoiced and paid duty. SPIPL availed 50% credit initially and additional credit on supplementary invoices. The dispute arose as the goods were not returned within 180 days as per Rule 4(5)(a), leading to a demand for duty recovery and penalties.Rule 3(4) & (5) of Cenvat Credit Rules:The Tribunal noted that under Rule 4(5)(a), if goods sent for processing are not returned within 180 days, the manufacturer must pay an amount equivalent to the Cenvat credit. However, the manufacturer can reclaim the credit upon receiving the goods back. Rule 3(4) & (5) state that when inputs or capital goods are removed from the factory, the manufacturer must pay an amount equal to the credit availed, which then becomes eligible as Cenvat credit upon removal.Decision and Ruling:The Tribunal held that SPIPL was entitled to avail the duty paid by HMIL as credit, as per Rule 3(5) of the Cenvat Credit Rules. Since capital goods can be cleared under Rule 3(4) or Rule 4(5), there was no objection to SPIPL taking credit on the supplementary invoices issued by HMIL. Consequently, the impugned order was set aside, and the appeals were allowed.Conclusion:The Tribunal's interpretation of the Cenvat Credit Rules allowed SPIPL to retain the Cenvat credit availed on the capital goods transferred by HMIL, emphasizing compliance with the provisions regarding duty payment and credit availing.
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