fiogf49gjkf0d
Credit of capital goods used for both the activities of job-work as well as for manufacturing dutiable products is admissible in terms of Rule 6(4) of CCR, 2004. Further once capital goods are transferred under cover of invoice, transferee is not required to prove the correctness of CENVAT credit availed by transferor.
Facts: Appellant received a crane from its sister concern under a cover of an invoice which showed its depreciated value. Appellant took CENVAT credit of the entire duty which was paid by its sister concern at the time of acquisition of the crane. Department contended that CENVAT credit available to the Appellant is restricted to duty payable on depreciated value mentioned in the invoice. It was submitted that if sister concern has paid any excess duty, said issue is required to be taken up at supplying unit’s viz. sister concern’s end. Further, CENVAT credit in respect of another machine was denied by revenue contending that such machine is used exclusively for job work undertaken by Appellant and not used for manufacture of dutiable goods.
Held As regards availment of CENVAT credit on acquisition of crane, Tribunal noted that in terms of Rule 3(5) of the CENVAT Credit Rules, 2004, if the capital goods were removed as such i.e. as capital goods, the sister concern of the Appellant was required to pay amount equivalent to CENVAT credit availed in respect of such crane. Once the duty paid on the crane was shown in the invoice, CENVAT credit was available to that extent. Further it was held that as regards question of correctness of payment of duty by its sister concern, such issue shall be dealt with by the authority having jurisdiction over the supplying unit. As regards availment of credit on capital goods used for job-work, the Tribunal noted that since it was clarified that machine used in its manufacturing unit was used for job-work as well as in the manufacture of dutiable goods and balance-sheet figures showed both charges received from job-work activities and sales made of dutiable goods, the Tribunal held that CENVAT credit was undoubtedly available in respect of such machine. Accordingly credit was allowed.
Note: Readers may also refer to the decision in the case of [2016] 69 taxmann.com 331 (New Delhi-CESTAT) – Shree Rajasthan Syntex vs. Commissioner of Central Excise, Jaipur-II which deals with entitlement of CENVAT credit on capital goods used initially towards manufacture of exempted goods and subsequently towards manufacture of dutiable goods. Amendment to Rule 6(4) of CCR, 2004 w.e.f. 01/04/2016 provides that if capital goods are used exclusively in manufacture of exempted goods/provision of exempted services for a period of two years from the date of commencement of commercial production or provision of service, or as the case may be installation of capital goods (if such capital goods are received after the date of commencement of commercial production), no CENVAT credit would be available, even if, after expiry of two years, such capital goods are used in manufacture of dutiable goods or provision of taxable services.
