2018 (9) TMI 2049 - AT - Central Excise

Tribunal grants Cenvat Credit despite direct supply to job workers

M/s Kaizen Industries Versus CGST & C. Excise, Howrah

The Tribunal allowed the appeal, setting aside the impugned order and granting relief to the appellant. The decision was based on the appellant's legal ... Irregular availment of CENVAT Credit - inputs - Copper ingot - goods were sent for job work - allegation is that appellant-assessee without having received the inputs in their factory, have availed the credit for payment of Central Excise duty on their final product - HELD THAT:- The present issue is no more res-integra in view of the various decisions of the Hon’ble Supreme Court, the Hon’ble High Courts and the Tribunal - the Co-ordinate Bench of the Tribunal in the case of AIR PAC Filters & Systems Pvt. Ltd. Vs. Commr. of Central Excise, Mumbai [2015 (4) TMI 1228 - CESTAT MUMBAI] were it was held that even if the input is supplied directly from supplier to the job worker, the Cenvat credit cannot be denied. Appeal allowed - decided in favor of appellant. Issues:- Alleged irregular Cenvat Credit on inputs procured from a supplier and utilized towards Excise duty payment without receiving the inputs in the factory.Analysis:1. The appeal was filed against an Order-in-Appeal alleging irregular Cenvat Credit utilization on inputs procured from a supplier without receiving them in the factory. The show-cause notice stated that the appellant contravened Rule 4(1) of the Cenvat Credit Rules, 2004 by availing credit for Excise duty payment on final products without physically receiving the inputs in their factory.2. The consultant for the appellant argued that the inputs were directly sent to job workers in Delhi to avoid transport time and costs, as the inputs were purchased from Jammu. He contended that the converted inputs were eventually received by the appellant for manufacturing final products. The consultant emphasized that the Department was aware of this practice, and the credit should not have been denied.3. The Department's representative reiterated the lower authorities' orders, emphasizing that for availing Cenvat Credit, it is mandatory for the inputs to be received in the factory of the manufacturer. The Department's stance was that since the inputs were not received in the factory, the credit should not have been allowed.4. The Tribunal found the issue to be settled based on various judicial precedents. Referring to a previous case, the Tribunal highlighted that when the final product is manufactured on a job work basis, the inputs need not necessarily come to the factory of the manufacturer but can be supplied directly to the job worker. As long as the inputs are used in manufacturing the final product, the appellant is entitled to Cenvat Credit. The Tribunal emphasized that no further procedure is required if it is evident that the input was sent for job work and the final product was exported by the appellant.5. Consequently, the impugned order was set aside, and the appeal was allowed in favor of the appellant, granting consequential relief. The Tribunal's decision was based on the legal entitlement of the appellant to Cenvat Credit despite the direct supply of inputs to the job worker and not physically receiving them in the factory.