2012 (4) TMI 140 - AT - Central Excise

Disallowing the CENVAT Credit along with interest, and imposed penalty under Rule 13 - Appellant are engaged in the manufacture of Wire Rope from duty-paid wire and accordingly availed the CENVAT Credit- Department denied the Credit as drawing of wire from wire rods does not amount to manufacture - appellant relied on CBEC Circular No.831/8/2006-CX dated 26.07.06 for claiming credit - Held that - retrospective amendment in Rule 16 vide CBEC Circular No.831/8/2006-CX 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 - Appeal in favour of assesee.

Summary

Issues:
Appeal against disallowance of CENVAT Credit amounting to Rs. 23,80,005/-, imposition of penalty under Rule 13 of CENVAT Credit Rules, 2002.

Analysis:
The Appellant, engaged in manufacturing wire rope from duty-paid wire, appealed against the Order-in-Appeal upholding the disallowance of CENVAT Credit and imposition of penalty. The Department contended that drawing wire from wire rods does not constitute manufacturing, thus denying the credit. The lower Adjudicating Authority upheld this decision, leading to the present Appeal. The Appellant argued that as per CBEC Circular No. 831/8/2006-CX, wire drawing units paying duty on drawn wire are eligible for credit on inputs. The Revenue did not dispute this Circular. The Tribunal noted that the issue was settled by the Circular, clarifying that wire drawing units paying duty on drawn wire could avail credit on inputs and use it for payment of duty on drawn wire. The Circular aimed to regularize credit at different stages without creating additional liabilities. Consequently, the Tribunal set aside the Commissioner's Order, allowing the Appeal and finding it unsustainable.

This judgment highlights the importance of CBEC Circulars in interpreting and applying tax laws, providing clarity on eligibility for CENVAT Credit in specific scenarios. It emphasizes the need for consistency in tax administration and adherence to Circulars issued by competent authorities. The Tribunal's decision to rely on the Circular to overturn the lower authorities' rulings demonstrates the significance of official guidelines in resolving disputes and ensuring fair treatment for taxpayers. The case underscores the role of Circulars in supplementing statutory provisions and guiding the implementation of tax regulations, promoting transparency and uniformity in decision-making processes.