Appellate tribunal grants cenvat credit for destroyed inputs, overturning Revenue's denial.

The appellate tribunal allowed the appeal, holding that the appellant is entitled to cenvat credit for inputs destroyed in a fire at the job-worker's factory. The tribunal clarified that Rule 3(5C) of the Cenvat Credit Rules does not apply to destroyed inputs and that the appellant is not liable to reverse the credit. The decision overturned the denial of cenvat credit by the Revenue, granting relief to the appellant.

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Issues:
1. Denial of cenvat credit for destroyed inputs sent to job-worker.
2. Applicability of Rule 3(5C) of Cenvat Credit Rules to destroyed inputs.

Issue 1 - Denial of cenvat credit for destroyed inputs sent to job-worker:
The appellant, engaged in manufacturing bulk drugs, availed cenvat credit on inputs sent to job-worker for manufacturing intermediate products. In a fire accident, inputs sent during October to November 2009 were destroyed. The Revenue sought to deny the cenvat credit availed by the appellant, resulting in the confirmation of demand and interest by the adjudicating authority and Commissioner (Appeals). The issue was whether the appellant is liable to reverse the credit when inputs were not used in the final product. The Tribunal referred to a precedent case where inputs sent to job-worker and destroyed in fire were considered issued for manufacture, entitling cenvat credit. The Tribunal held that the appellant is entitled to cenvat credit for destroyed inputs sent to the job-worker.

Issue 2 - Applicability of Rule 3(5C) of Cenvat Credit Rules to destroyed inputs:
The appellant argued that Rule 3(5C) applies when final products are destroyed, not inputs. Citing the Tribunal's decision in Themis Medicate Ltd. case, it was noted that Rule 3(5C) is invoked when remission of duty is sought for destroyed final products, not inputs. The Tribunal clarified that Rule 3(5C) does not apply when inputs are destroyed before reaching the final goods stage. The Revenue did not present any contrary decision. As the destroyed inputs were not at the final stage and no remission of duty was involved, Rule 3(5C) was deemed inapplicable. Therefore, the appellant was entitled to cenvat credit for the destroyed inputs at the job-worker's factory.

In conclusion, the appellate tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellant. The judgment emphasized that the appellant was rightfully entitled to cenvat credit for the inputs destroyed in the fire at the job-worker's factory.

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