2013 (2) TMI 138 - AT - Central Excise

Waiver of pre-deposit - Manufacture - Processes of grinding, sizing and packing of Silico Manganese - CENVAT Credit denied on input on ground that activity does not amounts to manufacture - Appellants are engaged in the manufacture of Silico Manganese - under chapter sub-heading 72023000 - received Silico Manganese in un-processed form and carried out the activity of grinding, sizing and packing - Revenue argued that since it does not amount to manufacture therefore CENVAT Credit availed on the said input is incorrect - Penalty under rule 15(2) of CENVAT Credit Rules, read with section 11AC of the Central Excise Act, 1944 - Held that - After carrying out the said processes, the resultant finished goods were cleared on payment of duty. Following the decision in case of CREATIVE ENTERPRISES (2008 (7) TMI 311 - GUJARAT HIGH COURT) allowed stay application in identical circumstances. Stay granted

Summary

Issues:
1. Application for waiver of pre-deposit of duty and penalty under CENVAT Credit Rules.
2. Admissibility of CENVAT Credit on Silico Manganese subjected to grinding, sizing, and packing processes.
3. Interpretation of 'manufacture' under section 2(f) of the Central Excise Act.

Analysis:
1. The appellant sought waiver of pre-deposit of Rs.3,18,42,924 and penalty imposed under rule 15(2) of CENVAT Credit Rules, along with section 11AC of the Central Excise Act, 1944.

2. The dispute centered around the admissibility of CENVAT Credit on Silico Manganese processed through grinding, sizing, and packing activities. The Revenue contended that these activities did not amount to 'manufacture,' thus challenging the eligibility of CENVAT Credit on the input material. The appellant argued that the processes were necessary due to a surge in orders, and the duty paid on the final product validated the credit availed on the input. Reference was made to relevant case laws supporting the appellant's position.

3. The Tribunal examined the facts and legal precedents cited by both parties. It noted that the input material, Silico Manganese, underwent processing before being cleared after duty payment. Citing decisions from the Mumbai Bench and the Delhi High Court, the Tribunal found that similar cases had been granted stay petitions based on the interpretation of 'manufacture' and admissibility of CENVAT Credit. Consequently, the Tribunal granted a prima facie case for total waiver of pre-deposit of duty and penalty, staying the recovery during the appeal's pendency. The stay application was allowed based on the established precedents and the appellant's arguments.