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2016 (12) TMI 30 - AT - Central ExciseJob-work - CENVAT credit - BHEL have not received back the inputs supplied to job workers fully. It is the case of the department that certain quantity of inputs viz. continuous cast copper rods, on which cenvat credit has been availed by BHEL supplied to the job workers, has not been fully accounted for and received back by BHEL and hence, there is a violation of provisions of Cenvat Credit Rules, 2004 - Held that: - BHEL have categorically asserted that there will certainly be a process loss and also emergence of scrap in the form of off-cuts and other pieces. BHEL requires the product with a particular specification and length. The generation of such specified intermediate products will result in certain end cuttings and also certain process loss. This much cannot be disputed. It is also not disputed that there will be certain conversion loss as no process can be undertaken on 100 % conversion basis. If the resultant product has to meet the standard specification of the principal manufacturer, off-cuts and the copper scrap, which is not useable for the intended purpose or further use by the principal manufacturer, are retained by the job workers and have been put to profitable use in further manufacture of various other items. These manufactured items have been cleared on payment of proper central excise duty at the job worker's end. This has also not been disputed. In such situation, we find that there is no justification for reversal of any credit availed on inputs by BHEL. There is no violation of provisions of Rule 4 (5)(a) of Cenvat Credit Rules, 2004 read with provisions of N/N. 214/96-CE. It is also apparent that the resultant off-cuts and scrap cannot be considered as "inputs as such" at the job worker's end. We find no evidence to that effect in the proceedings before the lower authority. Calculation for quantification of cenvat credit to be reversed by the principal manufacturer has been worked out on some percentage basis with no cross examination of manufacturing process at the job worker's end and the emergence of off-cuts and other waste products, which is not useable to the same intended purpose further by the job worker. Appeal allowed - decided in favor of appellant.
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