2010 (6) TMI 774

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....cessories etc. 3. During the course of arguments it was found that the assessee sends inputs / partly finished goods to job workers for further processing. However, the job worker used excess materials in the process on which Cenvat credit was availed and the appellants issued a debit note and recovered Rs. 6,05,716/- by way of debit from the job worker. Rule 3 of the Cenvat Credit Rules, 2004 allows credit of specified duty paid on inputs used in or in relation to manufacture of final products. No credit is allowable if the inputs are not used in the process of manufacturing. Any amount recovered towards excess consumption from the job worker is in the nature of recovering the cost of the inputs lost on account of excessive consumption ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ker and was required to be reversed. A show-cause notice was issued, demand were confirmed. 6. Aggrieved from the confirmation of demand by lower authorities, the appellant is before me. 7. Heard both sides. 8. The learned Counsel submitted that the appellants sent their inputs to job workers for doing certain process. The estimated quantity of inputs required for the required level of production is sent to the job worker under Rule 4(5) of the CCR, 2004. Generally the job worker follows the standard norms of consumption. However, sometimes the job worker consumes excess material than the standard norms. Thus, there are certain norms for consumption of the raw material by the job worker. However, sometimes due to power failure, mac....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....redit availed on purportedly higher utilization of inputs can be denied on the ground that inputs were not utilized in or in relation to the manufacture of the final product. In this case it was explained by the appellants that it is not a case of non-utilisation of input in the final product but it is a case of excess utilization on account of processing loss which may occur on account of number of technical factors like power cuts, quality of raw material and other related factors and in order to encourage efficiency and productivity the appellant collects penal charges related to excess utilization of material by way of debit notes. So the credit cannot be denied on the ground that the inputs are not utilized, in or in relation to the ma....