Whether avoiding movement of moulds to avoid unnecessary transportation be the cause of denial of credit?

PJ/Case Law/2013-14/1847

Case:-KRISHNA MARUTI LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI-III

Citation:- 2013 (292) E.L.T. 405 (Tri.-Del.)

Brief facts:- The appellant sent goods for Job work. The job worker manufactured moulds for the appellant for ultimate use thereof in manufacture of intermediate goods for the appellant. Instead of moving the molds from one place to other, i.e., from the premises of job worker to appellant’s premises and in turn going back from appellant’s premises to job worker’s premises for use in manufacturing intermediate goods, book entry was only made by way of a note on the invoice issued by job workers. It was to reduce the exercise of movement of goods and no mala fide was attributed or attached to the conduct of the appellant. But department deny the same and passed order against the appellant.

Appellant’s Contention:- The appellant submits that job worker manufactured certain moulds for the former for the ultimate use thereof in manufacture of intermediate goods for them. Instead of moving the moulds from one place to other i.e. from the premises of the job worker to the appellant’s premises and in turn going back from the appellant’s premises to the job worker’s premises for use in manufacturing intermediate goods, book entry was only made by way of a note on the invoice issued by job worker. The note read as“This Tools (Retained in the factory) are property of Krishna Maruti Ltd. (Door Trim Division). At present it is being used by us in our factory to make out component of Moel Car (Door Trim) for them”.

Respondent’s Contention:- The Revenue’s contention is that since the mould was not received in the premises of the appellant there was no mould further send by the appellant to the job worker for use in manufacturing intermediate goods. With this allegation cenvat credit was disallowed. There was no loss of Revenue because the moulds manufactured have suffered duty and that is not contradicted by Revenue.

Reasoning Of Judgment:- The Tribunal heard both the sides and perusing the records it is submitted by adjudicating authority that When job worker categorically stated in the body of invoice that the tools retained by it are property of the appellant and used to make components for the appellant, such a statement remained uncontroverted. It was to reduce the exercise of movement of goods and no mala fide was attributed or attached to the conduct of the appellant. The rule cannot be impediment or become, a tyrant but should be servant of law to do justice. This is not said from the angle of equity but from the ground reality in view of a bona fide declaration appeared on the invoice. Had the declaration been converted into mala fide by proper investigation by the Revenue, appellant would have been denied benefit. While pragmatic approach should be made to law, practical approach cannot be ruled out. What that was practical was agreed between the parties. The cenvat credit does not appear to have been claimed mala fide. Therefore, appeal is allowed.

Decision:- Appeal Allowed.

Comment:- The crux of this case is that credit cannot be denied merely due to the fact that the moulds on which credit was taken were not transported to the manufacturer’s premises and again sent to the job worker’s premises. The moulds were further used in the manufacture of intermediate goods by the job worker and so the transportation was avoided for convenience. As such, there was no malafide intention of not transporting the said moulds and so the credit was held to be admissible.

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PJ/Case Law/2013-14/1847

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