2007 (12) TMI 332 - AT - Central Excise

Cenvat/Modvat credit - Inputs - Board Circular No. 831/8/2006-CX. dated 26-7-2006 - Held that - the Board categorically clarified that the retrospective amendment is aimed at regularizing availment of credits at two stages. As such, the appellant s case is squarely covered by the Taxation of Laws (Amendment) Act, 2006 and Board s Circular dated 26-7-2006 - The retrospective amendment in Rule 16 is aimed at facilitating wire drawing units , which had paid a sum equal to the duty leviable on drawn wire after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage - appeal allowed - decided in favor of appellant.

Summary

Issues:
Confirmation of demand based on availing Cenvat credit on wire rods used for drawing wire and duty liability discharge.

Analysis:
The appeal challenged the Order-in-Original regarding the availing of Cenvat credit on wire rods utilized for drawing wire and duty liability discharge. The revenue contended that drawing wire from wire rods was considered a non-manufacturing activity by the Hon'ble Supreme Court, making the appellant ineligible for input stage credit on purchased wire rods. The appellant's counsel argued that the issue was covered by Board Circular No. 831/8/2006-CX. The Judicial Member noted that the Board Circular dated 26-7-2006 clarified retrospective amendments to Rule 16, specifically addressing wire drawing units. The Circular aimed to regularize credit at two stages, allowing units that paid duty on drawn wire to avail credit on inputs and use it for duty payment on drawn wire during the amendment period. The Circular did not impose additional liability on units not paying duty on drawn wire during the amendment period.

The Board Circular's clarification on retrospective amendments highlighted the aim of regularizing credit at two stages for wire drawing units. The Taxation of Laws (Amendment) Act, 2006 and the Board's Circular dated 26-7-2006 supported the appellant's case, leading to the setting aside of the impugned order and allowing the appeal. The judgment emphasized the alignment of the appellant's situation with the Circular's provisions and the legal framework, ultimately resulting in a favorable outcome for the appellant.