26 September 2008
We are the manufacturers of the A C Generators (Alternators), D C Motors and Wind Generators. In order to manufacture these goods we have to use electrical stampings, and these Electrical stampings are manufactured & supplied by our Job workers out of the Steel Sheets (raw materials) supplied by our Suppliers on our behalf i.e on Consignee basis. Since the Steel sheets (raw material) are directly delivered by our suppliers to our job workers premises, Job workers are entitled for availing the Cenvat Credit on such goods and availing the same.
Further, during the course of manufacture of Electrical Stampings, Steel Scrap is also generated as a by-product; the job workers are discharging the Excise duty both on finished goods i.e Electrical Stampings as well as Steel Scrap and sending back to us, since we are the owners of the entire material. On receipt of Electrical Stampings, being our inputs we are availing the Cenvat credit on strength of our Job Worker Duty paid document. Similarly, we are also availing the Cenvat Credit on Steel Scrap received by us, on the strength of our Job Worker Duty paid document.
Now, the Department has raised an objection, that we are not eligible to the take the Cenvat Credit on Steel Scrap which sent back by the job worker. The department is denying the Cenvat Credit on steel scrap; since the Steel Scrap is not an input for us
Now, my question is whether STEEL SCRAP GENERATED & CLEARED FROM THE JOBWORKERS PREMISES ON PAYMENT OF DUTY AND THE SAME IS RECEIVED BY THE PRINCIPAL MANUFCATURES is eligible for Cenvat Credit or not. If there are any case laws on the above subject mentioning of which may be of great help.
27 September 2008
No credit can be taken on the scrap as the condition to avail credit is: - it must be a input and should be used in the manufacturing of dutiable final product.
- You are not required to receive the scrap in your factory, it can be sold on payment of duty by the job-worker and value of the scrap can be recovered by you from the job-worker.
In fact the job-work charges should include the value of scrap also.
CAclubindia
