Recredit of amounts reversed when dispatched iron ore fines received as iron ore pellets.

PJ/Case Law /2016-17/3394

Case:- JSW STEELS (SALAV) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, RAIGAD

Citation:- 2016 (342) E.L.T. 269 (Tri. - Mumbai)

Brief facts:-This appeal is directed against Order-in-Appeal No. AT/442/RGD/2005, dated 29-8-2005.
The issue involved in this case is whether the Modvat credit availed by appellant during the period August, 1999 is required to be reversed or otherwise. Appellant had availed Modvat credit on Iron Ore fines. They dispatched these iron ore fines under the provisions of Rule 57F(4) for conversion into iron ore pellets by debiting an amount of 10% of the Modvat credit availed on iron ore fines. The said debits were credited under the provisions of Rule 57F(4) of Central Excise Rules, 1944. The job worker to whom iron ore fines were dispatched converted the same into iron ore pellets and paid duty on the said pellets by raising invoice under Rule 52A of the erstwhile Central Excise Rules, 1944. It is the case of the Revenue that appellant has not received back the iron ore fines sent to the job worker hence they are liable to reverse 10% which they have done so to avail recredit on receipt of iron ore pellets.

Appellat’s contention:- Ms. Aparna H., Advocate, appeared for the Appellant.

Respondent’s contention:- Shri Ashutosh Nath, Asst. Commissioner (AR), appeared for the Respondent.

Reasoning of judgment:-On perusal of records, The Hon’ble judge find that there is no dispute as to the fact that appellant is eligible to avail Cenvat credit on the iron ore fines and has followed the procedure of Rule 57F of the erstwhile Central Excise Rules, 1944 for converting the same into iron ore pellets from the job worker. It is also undisputed that the job worker has converted the iron ore fines into pellets and cleared the pellets on payment of duty as per Rule 52A. Appellant had not availed the Cenvat credit of duty paid on the iron ore pellets by the job worker. Appellant has simply recredited the amount of Cenvat credit reversed by them when they dispatched the iron ore fines to the job worker for conversion. In their considered view, the impugned order is unsustainable for the reason that there is no dispute as to the fact that the iron ore fines (inputs) dispatched by appellant were received back in the form of iron ore pellets and consumed by the appellant. The only question remains is that whether there is a co-relation or otherwise. In the case in hand the appellant specifically stated before the lower authorities that they had taken the recredit of amounts reversed by them when they dispatched iron ore fines on receipt of iron ore pellets. Revenue has not contested those submissions made by appellant before them. In their view, once it is established that iron ore pellets are received back from the job worker, nothing survives in these appeals and the recredit availed by the appellant is correct. Looking at the entire issue from a different angle, they find that the appellant could have availed Cenvat credit of duty paid by the job worker when they cleared iron ore pellets on payment of duty, as the said iron ore pellets is nothing but an input to the appellant. In their considered view, the appellant having reversed the Cenvat credit and then subsequently taken recredit on receipt of iron ore pellets is within the provisions of Rule 57F(4) of the Central Excise Rules, 1944.
In view of the foregoing, in the facts and circumstances of this case, they set aside the impugned order and allowed the appeal with consequential relief.

Decision:- Appeal allowed

Comment:- The analogy of the case is that Assessee send iron ore fines to job worker for conversion into iron ore pellets. Job worker cleared iron ore pellets on payment of duty. Assessee had not avail credit of duty paid by job worker but simply re-crediting amount of reversed by them when it dispatched iron ore fines to job worker for conversion. There is no dispute as to the fact that the iron ore fines dispatched by appellant were received back in the form of iron ore pellets and consumed by the appellant. In the case in hand the appellant specifically stated before the lower authorities that they had taken the recredit of amounts reversed by them when they dispatched iron ore fines on receipt of iron ore pellets.
Prepared by:- Monika Tak

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PJ/Case Law /2016-17/3394

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