TMI Blog2018 (5) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... 18 - Mr. Ashok Jindal, Member (Judicial) and Mr. Devender Singh, Member (Technical) Ms. Krati Somani, Advocate- for the appellant Sh. G.M. Sharma, AR- for the respondent ORDER Per: Ashok Jindal The appellant is in appeal against the impugned order denying the cenvat credit on inputs on account of certain inputs were rejected/ spoiled by the job worker and certain inputs were not received back by the appellant from the job worker. 2. The facts of the case are that the appellant is engaged in the manufacture of shocks absorbers. The appellant is sending duty paid inputs on which cenvat credit has been availed to the job worker for processing. The case of the Revenue is that as the appellant has received the inputs in less quantity which were sent to the job worker for processing, the appellant is not entitled to avail cenvat credit on short received inputs they received after processing. Another case is that the certain inputs have been rejected, therefore, the same have not been used in manufacturing for final product, therefore, they are not entitled to take cenvat credit. In this background, a show cause notice was issued to the appellant to deny c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e into waste and scrap generated at the end of the job worker. He further submits that as the appellant has shown very high wastage on rejects, therefore, they are not entitled to take cenvat credit thereon. 6. Heard the parties and considered the submissions. 7. On hearing the rival two issues arises from the facts of the case: (1) Whether the cenvat credit of ₹ 6,00,613/- cannot be denied to the appellant on account of inputs rejected/spoiled at the end of job worker premises which have been received by the appellant. (2) Cenvat credit of ₹ 67,16,069/- cannot be denied to the appellant inputs short received short on account waste/scrap generated at the end of job workers. Issue No.1: Cenvat credit of ₹ 6,00,613/- denied on inputs rejected/spoilt at the job worker's premises received back by the Appellant 8. We have seen that as per Rule 4(3) of the CCR, 2004 if any inputs were used in manufacturing of final product is entitled to take cenvat credit. Admittedly, the inputs later on found rejects/spoiled were sent for manufacturing to the job worker and used in manufacturing process, therefore, as per cenvat credit Rules, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te, refuse or by-product. In this context it is clarified that cenvat credit shall be admissible in respect of the amount of inputs contained in any of the aforesaid waste, refuse or by-product. Similarly, Cenvat should not be denied if the inputs are used in any intermediate of the final product even if such intermediate is exempt from payment of duty. The basic idea is that Cenvat credit is admissible so long as the inputs are used in or in relation to the manufacture of final products, and whether directly or indirectly. Further, we also find that the scrap generated at the end of the job worker is not manufactured for final goods as per the decision of the High Court of Judicature at Allahabad in the case Balrampur Chini Mills Ltd Vs. Union of India 2014 (300) ELT 372 (All.) wherein the High court has observed as under:- 18. A perusal of Rule 6(1) clearly shows that the manufacturer has to manufacture both dutiable goods as well as exempted goods. Since bagasse is not manufactured goods but is a waste product which emerges/comes into existence in the process of manufacture of sugar, it is not manufacture of exempted goods. 10. The said order of the Hon'ble H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oper. The same is set aside by allowing the appeal. Further in the case of Mukand Ltd. (Supra) has observed as under: 6. Having considered the rival contention, I hold that waste and scrap are not manufactured goods whether they are generated at-the premises of the principal manufacturer or at the premises of job worker and accordingly, the legislature have consciously not made any provisions for reversal of any credit taken on duty paid inputs in case of clearance of waste and scrap and/or, there non-return from the job worker's premises under the Central Excise Rules, 2002 read with Cenvat Credit Rules, 2002/2004. Accordingly, I set aside the impugned order and allow the appeal in favour of the appellant with consequential benefit, if any, in accordance with law. 13. As this issue has already been settled by this Tribunal that the waste and scrap generated at the end of the job worker, who had cleared the said waste and scrap on payment of duty. The appellant cannot be denied cenvat credit, therefore, we hold that the cenvat credit on ₹ 67,16,069/- cannot be denied to the appellant in the light of the above decisions. 14. We hold that the appellant ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal in which she has considered the facts and circumstances of the case and distinguished the judgement of Asahi India Safety glass Limited (supra). In the other case relied by the appellants of Ericsson India Pvt. Ltd. (supra), the inputs were imported which were found to be defective and question was whether Rule 3(5) of Cenvat Credit Rules, 2004 could be invoked on subsequent re-export of the said defective goods. The facts being different, the case law is not applicable to the facts of present case. In the case of Bakelite Hylam Limited (supra), the goods which were totally not suitable and rejected as waste were cleared on payment of duty, which is not the case in this case. The case of Fenner India Limited is not applicable as the Same pertained to the reversal of credit when the inputs on which the credit was availed were destroyed in fire accident. Similarly, the case of Themis Medicare Limited (supra) is not applicable as the same pertains to the destruction of the goods in fire before reaching prime stage. Therefore, I hold that the appellant is not entitled to avail credit of on the inputs/rejected/spoilt which were received back by the appellant. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard in respect of material gathered on the basis of the audit under sub-section (1) and proposed to be utilized against them in the proceedings under the Central Excise Act. But the assessee failed to submit their final reply on the special audit report even after expiry of two years from the date of supply of copy of special audit report to them. The department followed the principle of natural justice but the assessee did not co-operate with the department by not submitting final reply on the special audit report. Instead of submitting final reply on the special audit report, the assessee started making unnecessary queries from the department with intent to delay issue of show cause notice by the department. Therefore, the department was left with no option but to issue SCN to the assessee on the basis of special audit report. In this case issuance of show cause notice was delayed due to the fact that final reply on the special audit report was not submitted by the assessee. Therefore, the ratio laid down by the CESTAT in the case of Lovely Food Industries Versus Commissioner of Central Excise, Cochin cannot be applied in the instant case and hence, I hold that the instant SC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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