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PJ/Case Laws/2012-13/1308

Whether credit can be denied on the goods manufactured and further used by job worker on finished goods cleared to the principal manufacturer?
Citation:-2012-TIOL-1604-CESTAT-MUM
 
CASE:-M/s Larsen & Toubro Ltd. Vs. C.C.E. Belapur
 
Brief Facts:-The applicant filed this application for waiver of pre deposit of duty of Rs. 3,88,76,622/-, interest and penalty. The demand is confirmed after denying the credit in respect of the goods manufactured by the job worker which were further used by the same job worker in manufacture of impugned goods which were returned to the applicant. The revenue denied the credit on intermediate goods on the ground that goods manufactured by the job worker were not received in the factory of the applicant.
 
Respondent’s Contentions:-The respondent submits that applicant placed order for manufacture of certain goods on which the job worker has paid appropriate duty. The goods manufactured by the job worker were further used for the manufacture of the goods which were cleared by the same job worker under rule 4(5) (a) of the Cenvat Credit Rules, 2004. The case of the Revenue is that the applicant availed credit in respect of the goods manufactured by the job worker which were not received in the factory of the applicant.
 
Reasoning of the judgment:-The Tribunal find that the goods manufactured by the job worker on which appropriate duty has been paid was further used by the job worker in the manufacture of the goods which were returned to the applicant on payment of appropriate duty. The Tribunal found that the applicant has a strong case in their favour as the credit cannot be demanded simply on the ground that the goods manufactured by job worker are not received in the factory of the applicant. Therefore, pre-deposit of the same is stayed during the pendency of the appeal.
 
Decision:-The stay petition is allowed.
 
Comment: The analogy drawn from the case is that the basic motive of introduction of Cenvat Credit is to reduce the cascading effect and hence the benefit of the same cannot be denied on account of mere procedural lapses.
 
 
 

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