2013 (9) TMI 457 - AT - Central Excise

Cenvat Credit availment - Credit of duty availed by the Supplier (manufacturer) on drawing of wire / rods Process of drawing of wires from wire rods does not amount to manufacture under section 2(f) of Central Excise Act, 1944 as per the various decisions of Apex court retrospective amendment - Held that - The issue decided in the abovesaid case by the Supreme Court related to the excisability of such wires drawn from wire rods, which has no direct applicability in the appellants case Taken the credit correctly of the amount of duty paid on the steel wires used in the manufacture of ACSR conductors, which are cleared on payment of duty from the factory of the appellant - This availment of CENVAT credit is in accordance with the provisions of rule 3 of Cenvat Credit Rules, 2002 Decided in favor of Assessee.

Summary

Issues:
1. Admissibility of CENVAT credit on Steel wires used as input for manufacturing ACSR conductors.
2. Disallowance of CENVAT credit under rule 3 of Cenvat Credit Rules, 2002.
3. Imposition of interest and penalty under Cenvat Credit Rules, 2002.
4. Challenge to the order passed by Commissioner (Appeals) by the revenue.
5. Interpretation of legal precedents regarding the manufacturing process of wire drawing from wire rods.
6. Applicability of the retrospective amendment under Rule 16 of Central Excise Rules 2002.

Admissibility of CENVAT credit on Steel wires:
The Appellants availed CENVAT credit on Steel wires used as input for manufacturing ACSR conductors. The dispute arose as to whether the process of drawing wire from wire rods amounts to manufacture, given the legal precedents and circulars indicating that such wires are not excisable. The adjudicating authority disallowed the credit, leading to a show cause notice and subsequent order imposing recovery of interest and penalty.

Disallowance of CENVAT credit under rule 3:
The Commissioner (Appeals) allowed the appeal, emphasizing that the Appellants correctly received Steel wires as inputs for manufacturing ACSR conductors. The legal issue revolved around the applicability of rule 3 of Cenvat Credit Rules, 2002, which allows manufacturers to avail credit of excise duty. The Commissioner concluded that the Appellants had correctly taken credit of duty paid on the steel wires, as the wires were dutiable, and the imposition of penalty was unjustified.

Imposition of interest and penalty:
The Appellants were penalized for contravening rule 3 of Cenvat Credit Rules, 2002. However, the Commissioner (Appeals) ruled in favor of the Appellants, stating that the duty paid on the steel wires used in manufacturing ACSR conductors was in accordance with the rules. Therefore, the imposition of penalty was deemed unjustified.

Challenge to the order by the revenue:
The revenue challenged the Commissioner (Appeals) order, reiterating that wire drawing from wire rods does not constitute manufacture, and thus, no duty should have been paid or credit availed. However, the Commissioner's reliance on legal precedents established that utilizing credit for duty payment on the final product, even if no duty was required, did not necessitate further reversal.

Interpretation of legal precedents:
The legal issue centered on the interpretation of precedents regarding the manufacturing process of wire drawing from wire rods. The Commissioner (Appeals) clarified that the Appellants' case was not directly impacted by the Supreme Court's decision on the excisability of such wires, as the duty on the steel wires received by the Appellants was paid correctly.

Applicability of retrospective amendment:
The retrospective amendment under Rule 16 of Central Excise Rules 2002, effective from a specified date, regularized the input credit taken at the stage of wire rod. As the period in question fell within the retrospective amendment's scope, the appeal filed by the revenue was rejected, affirming the regularization of input credit.

This comprehensive analysis of the judgment highlights the key issues, legal interpretations, and outcomes related to the admissibility of CENVAT credit on Steel wires in the manufacturing process of ACSR conductors.