2013 (9) TMI 618 - AT - Central Excise

Tribunal Upholds Assessee's Cenvat Credit, Orders Revenue Refund

The Tribunal upheld the first appellate authority's decision allowing the assessee to avail Cenvat credit and directed the Revenue to refund the ... Availment of Cenvat Credit on input - Cenvat credit of central excise duty paid on the inputs viz. CHE zinc. The assessee herein directed the supplier of zinc to deliver the same to their job worker for conversion into alloy and availed Modvat credit at their end - Revenue were of the view that the assessee is not eligible to avail such Modvat credit as they are unable to evidence the receipt back of the goods from job worker – Held that:- Hon’ble CESTAT vide final order dated 19-4-2004 remanded the case to the original adjudicating authority for the limited aspect is to be examined the receipt of casting from the 2nd job worker - Accordingly, the assessee has submitted statements showing the quantity of the Zinc, Aluminum and Magnesium sent by the first job-worker M/s. Sun Metal Industries, Ahmedabad to the second job-worker M/s. Gujarat Die Casting Industries, Surat and also the statements showing the quantity of Castings received by them from the second job-worker M/s. Gujarat Die casting Industries, Surat during the period under reference. The statement indicates the supply of three ingredients separately by M/s. Sun Metal Industries, Ahmedabad, to the second job-worker M/s. Gujarat Die casting Industries, Surat, even though the final product is an alloyed product of Zinc, Aluminum and Magnesium. These statements only give the details of the movement of the inputs and semi-processed material from one job-worker to another and lastly to the assessee - Appellants had produced the documentary evidence in the form of delivery challans of receipt of the casting from the second job worker from M/s. Gujarat Die Casting Industries, Surat. The said delivery challans indicate the quantity dispatched to the Appellant – Decided in favor of Assessee. Interest on the amount of pre-deposit which were ordered by the Tribunal and the Commissioner (Appeals) for hearing and disposing their appeal – Held that:- Impugned orders in the earlier two rounds of litigation, were set aside by the Tribunal and the matter remanded back to the lower authorities would mean that the appellant is entitled for refund of the amounts which were ordered as pre-deposit. In this case, it is undisputed that an amount of Rs. 4,50,000/- was directed to be deposited by the higher judicial foras, for hearing and disposing the appeal, which eventually gone in assessee’s favour – Relying upon the judgment of the division bench of the Tribunal in the case of Goenka Woollen Mills Ltd. – [2011 (3) TMI 1136 - CESTAT, KOLKATA ], it was held that payment of interest when the claim was not settled within a period of 3 (three) months of the disposal of the appeal in the assessee’s favour – Revenue are liable to pay interest to the assessee-appellant in this case – Decided in favor of Assessee. Issues Involved:1. Availment of Cenvat credit by the assessee.2. Eligibility of the assessee to avail Modvat credit.3. Refund claim of pre-deposited amounts.4. Entitlement of the assessee to interest on the pre-deposited amount.Issue-wise Analysis:1. Availment of Cenvat Credit by the Assessee:The primary issue concerns the availment of Cenvat credit by the assessee on the central excise duty paid on inputs (CHE zinc). The lower authorities contended that the assessee was not eligible to avail such Modvat credit as they could not evidence the receipt back of the goods from the job worker. The adjudicating authority confirmed the duty amounting to Rs. 6,34,420/- and imposed a penalty of Rs. 1 lakh. This decision was challenged by the assessee, leading to multiple appeals and remands.2. Eligibility of the Assessee to Avail Modvat Credit:The core of the dispute was whether the assessee could avail Modvat credit for inputs sent to job workers for conversion into alloy under erstwhile Rule 57(F)(iii) of the Central Excise Rules, 1944. The first appellate authority, after reviewing the evidence, held that the appellant had received back the alloy casting in their factory premises from the job workers and hence were eligible to avail Cenvat credit. The Revenue argued that the assessee availed Modvat credit before the intermediate products were brought into the factory and failed to produce transport documents proving the receipt of processed goods. However, the Tribunal found the job work challans sufficient evidence under the provisions of Rule 57(F)(iii) and upheld the first appellate authority's decision.3. Refund Claim of Pre-deposited Amounts:The assessee sought a refund of the pre-deposited amount of Rs. 3,50,000/-, which was initially directed by the Commissioner (Appeals) for the disposal of the case. The adjudicating authority appropriated this amount against the confirmed duty demand. The first appellate authority's decision to set aside the confirmed demand implied that the assessee was entitled to a refund of the pre-deposited amount. The Tribunal noted that the lower authorities failed to follow their own Board's circular regarding the refund of pre-deposited amounts, leading to the conclusion that the assessee was entitled to the refund.4. Entitlement of the Assessee to Interest on the Pre-deposited Amount:The assessee contested the rejection of their claim for interest on the pre-deposited amount. The first appellate authority concurred with the adjudicating authority that the appellant was not entitled to any interest as the pre-deposited amount was appropriated against the confirmed demand. However, the Tribunal found this reasoning flawed, especially since the demands were set aside in earlier rounds of litigation. The Tribunal referred to the judgment in Goenka Woollen Mills Ltd., which established that refund of pre-deposit should include interest if the appeal is decided in favor of the assessee. Consequently, the Tribunal set aside the impugned order and directed the lower authorities to pay interest on the pre-deposited amount to the assessee.Conclusion:The Tribunal upheld the first appellate authority's decision allowing the assessee to avail Cenvat credit and directed the Revenue to refund the pre-deposited amount with interest. The appeals filed by the Revenue were rejected, and the cross-objection by the assessee was disposed of accordingly. The Tribunal emphasized adherence to procedural requirements and statutory provisions, ensuring that the assessee's rights were protected.