TMI Blog2018 (1) TMI 1167X X X X Extracts X X X X X X X X Extracts X X X X ..... f the CCR 2004, on the ground that this credit had been taken by the Bhiwadi unit on the basis of supplementary invoices issued by the Chopanki unit - Held that: - similar issue had come up before the Hon’ble Karnatka High Court in the case of Karnataka Soaps and Detergents [2010 (2) TMI 524 - KARNATAKA HIGH COURT], where it was held that the provisions of Rule 9(1)(b) are not applicable in case of stock transferred when there is no sale - demand for reversal set aside. CENVAT credit - demand for reversal against the Bhiwadi unit on the ground that this credit has been taken by that unit on the basis of certain invoices covering use of the cenvated inputs by Chopanki unit in job work for Bhiwadi unit - Revenue is seeking to reverse such credit at the Bhiwadi unit by taking the view that the Chopanki unit was not required to pay any duty - Held that: - It is settled position of law that the assessee who is taking the Cenvat credit is entitled to do so once the duty has been paid and goods received even if the duty on the product at the suppliers end is subsequently varied - there is no justification to demand reversal in this case. Appeal allowed - decided in favor of appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used only in the job work for the Bhiwadi Unit. Sometimes, in such cases, Chopanki Unit reversed the cenvat credit, but in a number of cases, it did not reverse the credit in respect of the inputs which were used in the job work of the Bhiwadi Unit. The first demand of cenvat credit of ₹ 9.24 crores against Chopanki Unit is on this ground i.e. in respect of inputs which were used by the Chopanki Unit in the job work for the manufacture of compounded rubber for the Bhiwadi Unit. There is no dispute that the Chopanki Unit has already paid ₹ 2.01 Crores out of ₹ 9.24 croes during investigation against supplementary invoices. 2.2. When Chopanki Unit paid an amount of ₹ 2.01 crores during investigation against their alleged duty liability of ₹ 9.24 crores, they paid this duty under a supplementary invoice issued to Bhiwadi Unit and on the basis of this supplementary invoice issued to Bhiwadi Unit, the Bhiwadi Unit took cenvat credit of ₹ 2.01 crores. The department invoking Rule 9(1) (b) of the Cenvat Credit Rules, 2004 denied this cenvat credit to Bhiwadi Unit on the ground that the non-reversal/ short reversal of the credit on the part by Chopank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposing penalty of ₹ 1.96 crores on them under Rule 15(2) of the Cenvat Credit Rules, 2002. Against this order of the Commissioner, Appeal No. E/52846/2014 has been filed by Bhiwadi Unit. 3. Heard both the sides and perused the appeal records. 4. Shri Amit Jain, Ld. Counsels for the appellants, pleaded that so far as the cenvat credit demand of ₹ 9.24 crores against the Chopanki Unit is concerned, this demand is not sustainable as the demand is in respect of the inputs belonging to Chopanki Unit used by them for job work in the manufacture of compounded rubber for Bhiwadi Unit, that since there was no physical movement of the inputs, no reversal of the cenvat credit is required, that in this regard, they rely upon the judgment of the Tribunal in the cases of H.V. Axles Ltd. Vs. CCE, Jamshedpur - 2012 (279) ELT 95 (Tribunal-Kolkata), DCM Engineering Products Vs. CCE, Jalandhar - 2010 (251) ELT 91 (Tribunal-Delhi), and Mutual Mecaplast Ltd. Vs. CCE, Daman - 2007 (220) ELT 888 (Tribunal-Ahmd.), that in these judgments, it had been held that when the cenvat credit availed inputs are used for job work but are not physically removed from the factory, the cenvat c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... conducted by the Anti-Evasion Officers on 18/07/2012. With reference to the demand of about of ₹ 9.24 crores he submitted that the Chopanki unit has issued invoices to Bhiwadi unit, showing removal of inputs. Even vehicle numbers have been mentioned. In such invoices but no duty was paid. Consequently, the demand made in the impugned order is fully justified. Out of this demand an amount of ₹ 2.01 crores was paid by the Chopanki units under a supplementary invoice, during the course of investigation of the case. He argued that such duty was paid only with the objective of enabling Bhiwadi unit to take Cenvat Credit, even though the Bhiwadi unit is not entitled to avail Cenvat Credit. Based on such invoice no credit is allowed since transaction is hit by the Rule 9 (1)(b) of the Cenvat Credit Rules. The Ld. DR further argued that the demand for about ₹ 2.76 crores against the Bhiwadi unit is justified in as much as there was no duty required to be paid by the Chopanki unit. In respect of inputs procured duty free by that unit, under Rule 3 (5) of the Cenvat Credit Rules, 2004, when there is no need to pay this duty, the invoice showing such payment will not be v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal folder that excise duty at prevailing rate will charged at the time of physical removal of pattern from its factory. This is sufficient to say that there was no physical delivery of pattern tool ever made by the appellant even till issuance of SCN. The appellant has proved its fairness indicating that it is prepared to pay excise duty on physical removal of the pattern tools. Such a fair statement enables to conclude that there was no case for revenue to invoke Rule 52A in absence of evidence of delivery without satisfying the twin conditions of the Rule . 11. It is further seen that the inputs in the Chopanki unit have been used to carry out job work for the Bhiwadi unit, and such goods have been further used by the Bhiwadi unit for manufacture of final products which have ultimately been cleared on payment of duty. Consequently, we find no justification in raising the demand against the Chopanki unit. Consequently, we set aside such demand. We also set aside penalties on the appellant as well as Shri Pawan Batra, Deputy GM. 12. Next we consider the demand for reversal of Cenvat Credit amounting to ₹ 2.01 crores raised against the Bhiwadi unit. Revenue has rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Since the value of soap takes into account the escalated cost of the sandalwood oil there cannot be any short payment of duty on the toilet soaps at Bangalore. In effect, the Government did not suffer any loss. In view of the above reasons there is absolutely no justification to deny CENVAT credit taken by Bangalore factory based on supplementary invoices issued by Mysore factory. Hence, the OIO passed by Commissioner of Central Excise Bangalore, has no merits. The same is set aside. Hence, we allow the appeal E/277/05 . By following the decision of the Hon ble High Court of Karnatakaa we find that the demand for reversal of Cenvat Credit of ₹ 2.01 Cr is not justified and is set aside. 13. Last issue remaining is with reference to the demand for reversal of ₹ 2.76 crores confirmed against the Bhiwadi unit on the ground that this credit has been taken by that unit on the basis of certain invoices covering use of the cenvated inputs by Chopanki unit in job work for Bhiwadi unit. It has further been held in the impugned order that Chopanki unit was not required to pay any amount under Rule 3(5), in as much as part of inputs were procured by import duty free under ..... 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