Jurisdiction to deny credit on Invoice issued by Jobworker not situated in that territory

PJ/Case Laws/2012-13/1030

Case: SPIC (HCD) LTD. V/s COMMISSIONER OF CENTRAL EXICE, CHENNAI-1

Citation: 2006 (201) E.L.T. 386 (Tri. - Chennai)

Issue:- Whether Adjudicating Authority has jurisdiction to deny credit of duty availed by assessee paid by its job workers on repaired/processed transformer oil and transformer?

Excess duty paid by jobworker on goods sent to principal manufacturer – credit of excess duty so paid – whether is available?

Brief Facts:- Appellant had taken credit of duty paid by its job workers on repaired/processed transformer oil and the transformer. The Original Authority confirmed the demand of credit to the extent of Rs. 1,83,966/- availed by appellant under Rule 57U of the Central Excise Rules, 1944. The Original Authority had held that the job workers were not required to pay duty on the repaired/reconditioned capital goods received by them under Rule 57S while returning them to the appellant-manufacturer who had originally availed credit of duty paid on the same. He had held that appellant were not eligible for the credit of duty paid by the job workers.

In appeal, the Commissioner (Appeals) upheld the order of the Lower Authority on the same ground.

Hence, appellant is in appeal before the Tribunal.

Appellant’s Contention:- Appellant asserted that Central Excise Officers having jurisdiction over them were not competent to revise the assessment appearing on the invoice covering the goods received by it. They cited the order of the Mumbai Tribunal in the case of Owens Bilt Ltd. v. CCE, Pune [1998 (101) E.L.T. 642 (Tribunal)] wherein the ratio laid down was that they were entitled to take credit of duty paid by job worker irrespective of the fact whether the job worker was required to pay duty or not.

Reasoning of Judgment:- The Tribunal observed that the appellant had received the goods and had taken credit of duty paid on those goods which had been sent under 52A invoices. It was held that the Commissioner having jurisdiction over the appellant’s unit cannot revise or restrict the credit admissible to the appellant who received the goods on payment of duty under cover of prescribed statutory documents. Therefore, the impugned order demanding credit of duty availed by the appellant, of the duty paid on the goods received by it, after repair/reconditioning is not sustainable.

The Tribunal relied on judgment in Kerala State Electronic Corporation v. CCE, Kochi [1996 (84) E.L.T. 44 (Tri.)] wherein it was held that “the recipient of the input was entitled to take Modvat credit of the duty paid on the inputs received by it, and credit could not be restricted by the authority having jurisdiction over the recipient of the inputs on the ground that the duty paid was in excess of the duty actually payable”.

The Tribunal held that the observation in this judgment applied mutatis mutandis to capital goods credit as well. The assessee had worked out duty liability on the processed oil with reference to the quantity of used oil received for processing. As there was no shortage in the oil received by the appellant compared to the quantity of processed oil cleared by the job worker on payment of duty, the observation of the lower authorities that the appellant was eligible for a lower credit owing to the oil lost in process is not maintainable. Impugned order set aside.

Decision:- Appeal allowed.

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PJ/Case Laws/2012-13/1030

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