2026-VIL-1723-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Admissibility of CENVAT credit on capital goods (moulds) sent to job-workers under job work challans - Appellant, a manufacturer of batteries, availed CENVAT credit on moulds and supplied them to job-workers under job work challans, while the polypropylene granules were sold to the job-workers after reversing the credit, and the job-workers returned the finished containers and lids to the Appellant on payment of duty, the duty being availed as credit - The Department alleged that the moulds were not used in the factory of the manufacturer, that they were sent to independent manufacturers instead of job-workers, and that this amounted to double credit - Whether the Appellant was entitled to the CENVAT credit on the moulds - HELD - How material is sent to the job-worker is the outlook of the manufacturer. Reversing credit on the granules avoided the hassle of reconciling consumption, scrap and quantities at the end of the job-worker - The moulds are capital goods of the Appellant and the intellectual property connected to them belongs to the Appellant, who therefore preferred to send them on job work basis and account for them properly in its books. There is no contravention of the Cenvat Credit Rules, 2004 in the procedure adopted. The transaction does not result in double credit benefit. Had the Appellant reversed the credit on the moulds, the job-worker could have taken the credit and reversed it again while sending the goods back, and the Appellant would claim it back on return of the moulds, resulting in a revenue neutral situation - The job work procedure under Notification No.214/86 was devised to avoid such multiple reversals. An order of the Commissioner (Appeals) on the identical issue in favour of the Appellant's other unit was not appealed by the Revenue and attained finality - No case is made out by the Revenue, the impugned order is set aside and the appeal is allowed - Central Excise - Invocation of extended period of limitation for demand of CENVAT credit in a revenue neutral situation - Show cause notice was issued by invoking the extended period for recovery of credit availed on moulds sent to job-workers - Whether the demand for the extended period is sustainable - HELD - The facts of availing CENVAT credit on the granules, reversing it, availing credit on the moulds and removing them under job work challans were well within the knowledge of the Range and Divisional officials. The allegation of suppression with intent to evade duty cannot be sustained. The transaction would also result in a revenue neutral situation if the Appellant were made to reverse the credit on the moulds. It has been held that where the exercise is revenue neutral, as the job-worker would be entitled to take the credit of the same, there cannot be any intention to evade payment of duty - The confirmed demand for the extended period is not sustainable on account of time bar.
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