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of <h1>Cenvat credit for capital goods sent to job-worker upheld; assessee-owned machines qualify - credit allowed, order set aside</h1> Dominant issue - entitlement to Cenvat credit where capital goods were sent directly to a job-worker: Held that Rule 4(5)(a) (as amended by Notification ... Availability of Cenvat credit on capital goods which were sent directly to a job worker and not brought to the appellant's factory premises - denial of credit only on the ground that Kink Bending Machine is that the machine was not received in the factory of the Assessee - Rule 4(5)(a) of CCR - Time limitation - HELD THAT:- In terms of Rule 4(5)(a), amended vide Notification No. 6/2015-CE dated 01.03.2015 by insertion of a new proviso, an Assessee can take cenvat credit on the goods sent directly to the job worker's premises without being brought to the factory of the Assessee. Hence, this amendment is clarificatory in nature and so this position is to be taken as it existed even prior to the insertion. It remains uncontroverted that owing to the size and weight of the machines in question they were not brought to the Appellant’s factory premises, there is no dispute as to the Appellant being the owner of said machines and also to the fact that the same were used exclusively for the manufacture of chassis frames, for the Appellant. Hence, there may not be any issue as to the Appellant’s eligibility for taking and retention of credit as per Rule 4(5)(a) ibid. Even otherwise, it is found that if at all, it was only a procedural infraction for which, a substantive benefit could not be denied. This view has ben laid down by the Hon’ble Apex Court in the CCE Vs. Home Ashok Leyland Ltd. [2007 (3) TMI 257 - SUPREME COURT] In any case, it is not the case of the Revenue that the goods in question ‘Kink Bending Machine’ was ineligible capital goods per Rule 2(a) of the CCR. Time limitation - HELD THAT:- No case is made out for invoking the larger period since there was nothing that was suppressed - Even otherwise, there cannot be any room to allege duty evasion as it’s clearly a Revenue-neutral situation - Tribunal is agreed with the Revenue-neutral situation because, going by Rule 4(5)(a), if the said capital goods are not received back within 180 days after being sent for job work, then the Appellant has to reverse the amount equal to the credit taken and take the credit when the capital goods are received in their factory. There are no merit in the impugned order, the Order-in-Original was in order both on merits as well as on limitation and hence, the impugned Order-in-Appeal does not sustain - appeal allowed. Issues: Whether the appellant is entitled to retain Cenvat credit on capital goods (Kink Bending Machine) which were sent directly to a job worker and not brought to the appellant's factory premises, and whether extended period of limitation and penalty can be invoked.Analysis: The dispute concerns claim of Cenvat credit on capital goods used exclusively for manufacture of appellant's final products but remaining at the job worker's premises due to size and weight, and whether Rule 4(5)(a) permits such credit without physical receipt in the factory. Rule 4(5)(a) allows Cenvat credit for inputs or capital goods sent to a job worker provided the goods are received back within the stipulated period and contains a proviso (inserted by Notification No.6/2015-CE dated 01.03.2015) clarifying that credit shall be allowed even if capital goods are directly sent to a job worker and the two-year period is counted from receipt by the job worker. The Tribunal examined precedent holdings that mere location of capital goods outside factory does not deny credit, considered revenue-neutrality where reversal is provided for non-return within time, and noted absence of any allegation that the goods were ineligible capital goods under Rule 2(a). On limitation, the Tribunal found no suppression or intent to evade duty; the Adjudicating Authority had held the infraction was technical and the appellant had paid duty, negating invocation of extended period.Conclusion: Credit on the capital goods sent to the job worker without being brought to the appellant's factory is allowable under Rule 4(5)(a) as understood with the clarificatory proviso; there is no basis to invoke extended limitation or impose penalty. The appeal is allowed on merits and limitation in favour of the assessee.
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