Denial of Job-work permission - permission denied because it will lead to fall in revenue for Commissionerate?
THE assessee is a multi-location unit. The unit at Tuticorin had applied for permission to send copper anodes to the units at other locations on job-work basis under Rule 4(6) of the CENVAT Credit Rules, 2004 for conversion into copper cathodes. The permission was denied on the ground that the goods sought to be sent for job work are not inputs or partially processed inputs , but are final products of Tuticorin unit.
The assessee inter alia submitted that “they have been manufacturing Anode, Cathode and all downstream products at both Tuticorin factory and the factories at Vapi since 2002. They have been given permission to remove anodes without payment of duty from Tuticorin factory to other factories since 2002. This arrangement was resulting in lower payment of excise duty at Tuticorin Commissionerate about which the central excise officials there were unhappy because they wanted to show higher collections in their Commissionerate. According to him, such an approach has resulted in the genesis of the problem at hand, though actually there is no Revenue loss to the exchequer because the duty if paid at Tuticorin would have resulted in lesser collections for the same amount at Vapi.”
The Tribunal dismissed the revenue appeal against the order of Commissioner (Appeals), but the above case reveals that the sheer ambition to reach revenue targets could make an assessee run from pillar to post for permissions, while it makes no difference to the total revenue.