2012 (9) TMI 411 - AT - Central Excise

Cenvat credit import of Copper Wire - department of the view that the appellants were not undertaking any manufacturing activity and hence they were ineligible for CENVAT Credit taken on the CVD paid on imported copper wire/rod Held that - Appellant had been carrying out a detailed process, which can be construed as an ancillary or incidental process for manufacturing a final product i.e. Super Enameled Copper Wire or Submersible Winding Wires - such detail process, which has been explained by the Power of Attorney holder of the assessee is consonance with the provisions of Rule 3 of the Cenvat Credit Rules, 2004 which requires manufacture by using inputs in or in relation to the manufacture of final products - appellant-assessee is eligible for the CENVAT credit of the duty paid as CVD on the imported Copper wire

Summary

Issues:
Whether the appellant correctly availed CENVAT credit on imported copper wire used in manufacturing 'Super Enameled Copper Wire'?
Whether the process undertaken by the appellant amounts to manufacturing of goods?
Whether the appellant is eligible for CENVAT credit as per Rule 3 of the Cenvat Credit Rules, 2004?

Analysis:
The appeals were against an Order-in-Original regarding the denial of CENVAT credit on imported copper wire by the appellant, who manufactured 'Super Enameled Copper Wire'. The department alleged no manufacturing activity, leading to a show cause notice for credit denial, interest, and penalties. The appellant contested, citing the manufacturing process, reliance on tribunal decisions, and the utilization of CENVAT credit for cleared products. The issue was whether the appellant rightfully availed CENVAT credit on imported copper wire used in manufacturing their final products.

The adjudicating authority held that the process of cutting, rewinding, inspection, and branding by the appellant did not constitute manufacturing. However, the detailed manufacturing process provided by the appellant's representative demonstrated activities integral to manufacturing 'Super Enameled Copper Wire'. The process included drawing conductors, testing, annealing, enameling, rewinding, testing, and quality assurance, aligning with Rule 3 of the Cenvat Credit Rules, 2004. The authority overlooked this crucial evidence recorded during the factory visit, supporting the appellant's manufacturing activities.

Referring to relevant case laws, the Tribunal found that the appellant's process aligned with manufacturing requirements for CENVAT credit eligibility. Previous judgments confirmed that activities like cutting wires and enameling were ancillary to final product manufacturing. The Tribunal concluded that the appellant was entitled to CENVAT credit on the imported copper wire. The impugned order was set aside, and the appeals were allowed with any consequential relief. This decision emphasized the importance of considering detailed manufacturing processes in determining CENVAT credit eligibility, ensuring compliance with relevant rules and precedents.