2013 (11) TMI 1134 - AT - Central Excise

Waiver granted for manufacturer in Cenvat Credit demand case due to procedural compliance issue

The Tribunal granted a waiver of pre-deposit for a manufacturer facing a Cenvat Credit demand for non-compliance with procedural requirements in sending ... Evidences of material sent for job work returned– Waiver of Pre-deposit – Held that:- The invoices do mention the challan No. under which the goods had been received from the appellant for processing along with quantity - When the receipt of the material from the job workers is not disputed, the Cenvat Credit cannot be denied to the appellants as Rule 4(5)(a) of Cenvat Credit Rules 2004 does not prescribe any particular documents on format under which the Cenvat Credit availed inputs are to be send to the job worker for processing and return - Rule Rule 4(5)(a) of Cenvat Credit Rules, 2004 does not provide any particular format for sending material to job worker and only mention that from the record maintained by the assessee it must be ascertained that goods have been received back – Thus, the appellant have strong prima facie case in their favour - the requirement of pre-deposit of Cenvat Credit demand, interest and penalty waived till the disposal – Stay granted. Issues:Central Excise duty demand on Cenvat Credit availed inputs sent to job workers for processing and return; Compliance with procedural requirements under Central Excise Law for sending and receiving goods from job workers; Applicability of Rule 4(5)(a) of Cenvat Credit Rules, 2004; Prima facie case for waiver of pre-deposit of Cenvat Credit demand, interest, and penalty.Analysis:The appellant, a manufacturer of sheet metal components and steel fabrications, faced a demand for Cenvat Credit amounting to Rs.5,90,330/- for the period of 2006-07 to 2010-11. The demand arose as the job workers returned the processed goods under separate challans/invoices instead of the prescribed job work challans. The Additional Commissioner confirmed the demand, observing non-compliance with mandatory procedural requirements for processing through job workers. The Commissioner (Appeals) upheld this decision, leading to the current appeal and stay application.The appellant argued that the goods were returned within the stipulated period, even though not under prescribed documents. They contended that Rule 4(5)(a) of the Cenvat Credit Rules, 2004 only requires evidence of goods being received back in the factory, not specific formats for sending to job workers. They highlighted a strong prima facie case in their favor and sought a waiver of pre-deposit for the appeal hearing. The departmental representative opposed, citing the Board's Circular and the necessity for job workers to return processed material under duplicate copy of challans issued by the manufacturer.Upon review, the Tribunal found that while the job workers did not return the goods under duplicate copy of job work challans, the material was received back and invoices mentioned the challan number under which goods were sent for processing. The Tribunal emphasized that Rule 4(5)(a) does not mandate a specific format for sending materials to job workers. It distinguished the Board's Circular, applicable to different rules, and granted a waiver of pre-deposit due to the strong prima facie case in favor of the appellant. Consequently, the stay application was allowed, and recovery of Cenvat Credit demand, interest, and penalty was stayed pending appeal disposal.