Availability of credit on inputs in work-in-progress and contained in finished goods lying in factory on crossing over SSI exemption under Notification No. 8/2003-CE.

PJ/Case Laws/2011-12/1451

Case: EUREKA CONVEYOR BELTINGS PVT. LTD. Versus COMMISSIONER OF C. EX., JAIPUR

Citation: 2011 (272) E.L.T. 285 (Tri. - Del.)

Issue:- Availability of credit on inputs in work-in-progress and contained in finished goods lying in factory on crossing over SSI exemption under Notification No. 8/2003-CE.

Brief Facts:- Appellant were claiming SSI exemption under Notification No. 8/2003-CE. On 9-10-07, appellant informed the Revenue Department that they are going to cross the limit of SSI exemption on 11-10-07. Accordingly, appellant started maintaining statutory records as per Central Excise Rules and claimed the credit on the inputs lying on 11-10-07 in respect of inputs account in process and input containing in finished goods. On physical verification by the officer, it was found that inputs gone into process and finished goods could not be verifiable inputs account in process and input containing in finished goods was denied.

The Commissioner had denied the credit to appellant on which they had claimed as inputs have gone in the working process and finished goods lying in their stock at the time of availing exemption under Notification No. 8/2003-CE.

Aggrieved by the said order, appellant is before the Tribunal.

Appellant’s Contention:- Appellant submitted that as per inspection report, the inventory of inputs was prepared such as work in progress and the finished goods were available in their factory. It is not in dispute that as per Rule 3(2) of Cenvat Credit Rules, 2004, the appellant is entitled to claim on the inputs gone in process and inputs containing in finished goods. Merely because the appellant was not maintaining any records utilizing of their inputs credit cannot be denied on the inputs gone in process and inputs containing in finished goods.

Respondent’s Contention:- Revenue submitted that in this case the appellant himself has failed to provide the data should such as the inputs showing in the work in progress and inputs showing in the finished goods and this onus is on the appellant which he has failed to discharge. Accordingly the Lower Authority has rightly denied the credit on the inputs containing in work in progress and finished goods.

Reasoning of Judgment:- The Tribunal found that as per Rule 3(2) of Cenvat Credit Rules, 2004, the appellant is entitled for credit on the inputs in work in progress and inputs containing in finished goods as on the date the inputs work in progress lying in their stock and on the date of cross of SSI exemption limit. Accordingly, the appellant is entitled for credit on the inputs containing in work in progress and inputs containing in finished goods. The only dispute remains how much of the inputs gone in work in progress and how much inputs containing in the finished goods. For this aspect, the matter needs further examination by the Adjudicating Authority. Hence, the mater is remanded to the Adjudicating Authority to ascertain the quantity of inputs by applying the formula input and output ratio and to ascertain how much the manufacturer is entitled to claim the credit.

Decision:- Appeal is allowed by way of remand.

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PJ/Case Laws/2011-12/1451

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