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2015 (10) TMI 423 - CESTAT NEW DELHI

2015 (10) TMI 423 - CESTAT NEW DELHI - 2015 (323) E.L.T. 634 (Tri. - Del.) - Reversal of CENVAT Credit - goods destroyed in the fire - Whether the provisions of Rule 3(5B) of CCR, 2004 are applicable to the facts of this case or not - Held that:- It was actually the inputs which were destroyed, the appellants stand is that it was the work-in-progress, which was destroyed in the fire. We note that the appellant, right from their first letter onwards, in all their communications addressed to the R .....

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of the goods stand given by them and has concluded that inasmuch as the goods described by the name of the inputs, on which credit was availed, it has to be held as if the inputs were destroyed. - goods were admittedly work-in-progress, in which case, no reversal of credit is justified. There is clearly no evidence on record to substantiate Revenue's allegations and findings that the destroyed goods were actually inputs, which were not issued for further manufacturing - Respondents are not requ .....

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issued to deny the Cenvat credit on inputs used in the semi finished goods./work in progress which were lost in fire. 2. The facts of the case are that on 29.2.2010 the fire broke out in the factory of the respondent wherein semi-fmished goods and work-in-progress was destroyed. The respondent filed remission claim of duty under Rule 21 of the CER, 2002 which was rejected by the learned Commissioner on the premise that the semi-finished goods and work-in-progress are not excisable, therefore, c .....

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how cause notice as Show cause notice alleged that the respondent is required to reverse the Credit as per Rule 3(5B) of the CCR, 2004. Therefore, the impugned order is required to be set aside in the light of CBEC Circular No. 907/27/09-CE dated 7.12.09. 5. On the other hand, learned Counsel opposed the contention of the learned AR as inputs have been used for the production, therefore, said inputs were at the stage of manufacturing and were lost in fire, therefore, they are not required to rev .....

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nsel, learned AR submits that case law relied upon by the learned Advocate are not applicable to the facts of this case as Rule 2 and 3 have been introduced with effect from 11.5.07 and in both the cases, fire broke out prior to said period. 7. Heard the parties. Considered the submissions. 8. In this case, the contention of the learned AR is that the Show cause notice was issued to the respondent to reverse the Cenvat credit as per the provision of Rule 3(5B) of the CCR, 2004 and CBEC Circular .....

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ut or capital goods: Provided that if the said input or capital goods is subsequently used in the manufacture of final products, the manufacturer shall be entitled to take the credit of the amount equivalent to the CENVAT Credit paid earlier subject to the other provisions of these rules" 9. Therefore, the issue before me in this case is that whether the provisions of Rule 3(5B) of CCR, 2004 are applicable to the facts of this case or not. On plain reading of the Rule 3(5B) it is clear that .....

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ssee is required to reverse the Cenvat credit which was availed on this inputs/capital goods. In this case, fire has broken in the factory of the premises of the respondent wherein the inputs which were used in manufacture were destroyed. It is admitted fact that inputs were in the process of manufacture of final goods. Therefore, the provisions of Rule 3(5B) of the CCR, 2004 are not applicable to the facts of this case. 10. Now I deal with the situation wherein the inputs were issued for manufa .....

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re issued for further manufacture of the goods and goods are destroyed during the course of manufacture of the goods, no reversal of Cenvat credit is called for. For the above proposition, reference can be made to the Tribunal's decision in the case of Commissioner of Central Excise and Customs, Pune v. Spectra Speciality [2008 (231) E.LT. 346 (Tri-Mum.)] as upheld by the Hon'ble Supreme Court as reported in [2009 (240) E.LT All]. To the same effect is another decision of the Tribunal in .....

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to all such decisions as the issue is almost settled. 14. As such, in the light of the said decision as detailed above, the factual position, as disputed by the Revenue, is required to be ascertained. Whereas the Revenue is contending that it was actually the inputs which were destroyed, the appellants stand is that it was the work-in-progress, which was destroyed in the fire. We note that the appellant, right from their first letter onwards, in all their communications addressed to the Revenue .....

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e goods stand given by them and has concluded that inasmuch as the goods described by the name of the inputs, on which credit was availed, it has to be held as if the inputs were destroyed. However, this stand explained by the learned advocate appearing for the appellant, that during the process of manufacture, there are various recoveries of the same inputs, which are again used at the manufacturing floor. We find that without referring to the technical details, we note that there is no dispute .....

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