SREE ANANTA KUMAR MILLS LTD. Vs. CCE

JUDGEMENT

(1.) THE appellants are engaged in the manufacture of cotton yarn. During the period 1st December, 2001 to 11th January, 2002, they removed single yarn on payment of duty under their invoices to their job workers for conversion into double yarn. The doubled yarn received from the job workers were further processed and cleared by them on payment of duty. The despatch of doubled yarn to the appellants' factory by the job workers was under the above invoices accompanied by delivery challans issued by the job workers. The appellants availed Cenvat credit of Rs. 1,75,157 on single yarn (input) on the strength of these documents. Both the original authority and the first appellate authority disallowed this credit to the assessee on the ground that their own invoices under which the single yarn was removed to job workers for conversion, were not valid documents for Cenvat credit purpose. Hence the present appeal.

(2.) AFTER examining the records and hearing both sides, I find that the short question arising in this case is whether Cenvat credit of duty paid by the appellants on the single yarn was deniable to them on the ground that the invoices issued by them covering despatch of doubled yarn from the job workers were not valid documents for Cenvat Credit purpose. Identical question had arisen before this Bench in appeal no. E/1101/2004 (Madhava Lakshmi Mills Ltd. v. CCE, Coimbatore) and the same was decided in favour of the assessee. Para 2 of the final order passed by this Bench in the said appeal is reproduced below: After hearing both sides and considering their submissions, I find that there is no dispute, in this ease, of the input (single yarn) having been used in the manufacture of final product. The duty -paid nature of the input is also not in dispute. The only question to be looked into is whether credit of the duty paid on the input is liable to be denied to the assessee on the ground that the credit was taken on the strength of the assessee's own invoices. This question is no longer res integra inasmuch as it has been consistently held by this Tribunal that there is no taboo on such availment of credit. In the facts of this case, the appellants manufactured cotton yarn (single) and removed the same on payment of duty under own invoices, to job workers for the purpose of doubling. These invoices are the proper, duty -paying documents pertaining to cotton yarn (single). The doubled yarn was removed by the job workers to the appellants' factory under cover of these invoices coupled with their own delivery challans. The doubled yarn so received by the appellants was an intermediate product, which was further processed into the final product Page 240 in their factory and cleared on payment of duty. The appellants were very much within their right to take Cenvat credit on cotton yarn (single) on the strength of the above invoices and utilize the same for payment of duty on their final product. Apparently, they have only taken the advantage of Rule 5(a) of Cenvat Credit Rules 2001/2002.

(3.) FOLLOWING the above precedent, I set aside the impugned order and allow this appeal.