2016 (9) TMI 365 - AT - Central Excise

Whether the appellant is entitled to avail cenvat credit on capital goods which were sent to their sister unit who are job worker under Rule 4(5)(a) of Cenvat Credit Rules - Capital goods was removed/cleared from the unit where the credit was availed to appellant s own unit (sister unit) within the same Commissionerate - job worked-goods returned back to appellant s factory within stipulated period prescribed and were used in the manufacture of final product and cleared on payment of duty. Held that - it is only the movement of capital goods between the appellant s own units situated within the same Commissionerate for use in the manufacture of the same final product. Similar issues was dealt with by the Tribunal in the various cases which were also upheld by Hon ble High Courts. The ratio of Tribunal s decision in the case of Zenith Machine Tools Pvt. Ltd. Vs CCE Belgaum 2010 (4) TMI 481 - CESTAT, BANGALORE by following the decision of Hon ble Punjab & Haryana High Court in the case of Commissioner Vs Pooja Forge Ltd. 2007 (11) TMI 316 - HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH is squarely applicable to the case. Therefore, by following the same, the impugned order is set aside. - Decided in favour of assessee with consequential relief

Summary

Issues Involved:
- Availment of cenvat credit on capital goods not installed in registered premises
- Allegation of contravening provisions of Rule 4(2), Rule 9(5) of CCR 2004, and Section 11A of Central Excise Act
- Demand of recovery, interest, and penalty imposed by adjudicating authority
- Upholding of order by Commissioner (Appeals)
- Appeal before the Tribunal challenging the decision

Issue 1: Availment of Cenvat Credit on Capital Goods:
The appellant-assessee, engaged in manufacturing, faced allegations of availing cenvat credit on capital goods not present in their registered premises but installed in a sister unit. The show cause notice proposed a demand for recovery under Section 11A of Central Excise Act. The adjudicating authority confirmed the demand with interest and penalty. The central question was whether the appellant was entitled to avail cenvat credit on capital goods sent to their sister unit for job work under Rule 4(5)(a) of Cenvat Credit Rules.

Issue 2: Allegation of Contravention of Rules and Provisions:
The Revenue contended that there was a contravention of Rule 4(2)(a) and Rule 9(5) of CCR 2004, leading to inadmissibility of the credit. The department discovered the movement of capital goods to the sister unit during an audit, invoking a longer period for scrutiny. The lower authorities upheld the inadmissibility of credit, and the Revenue argued for dismissal of the appeal.

Issue 3: Tribunal's Analysis and Decision:
The Tribunal analyzed the submissions from both sides and reviewed the case laws cited by the appellant. It emphasized that the movement of capital goods between the appellant's units within the same Commissionerate for manufacturing the final product was permissible under Rule 4(5)(a). The Tribunal referenced previous cases to support the appellant's position, highlighting the eligibility for cenvat credit on goods sent to a job worker and returned within the stipulated period. The Tribunal found the case laws cited by the appellant applicable and set aside the impugned order, allowing the appeal with consequential relief.

In conclusion, the Tribunal's judgment favored the appellant-assessee, allowing them to avail cenvat credit on capital goods sent to their sister unit for job work, as per Rule 4(5)(a) of the Cenvat Credit Rules. The decision highlighted the importance of compliance with procedural requirements and the movement of goods within the same Commissionerate. The legal analysis and precedent cited in the judgment supported the appellant's position, leading to the setting aside of the impugned order and granting of consequential relief.