2014 (2) TMI 322 - AT - Central Excise

Availment of CENVAT Credit - Commissioner set aside demand - Held that - Although the Circular No. 720/36/2003/CEX-4 dated 29.5.2003 spells out that drawing of steel wire from wire rods are not required to pay duty and the buyers of S.S. wire are not entitled to take credit but the said Circular was over-ruled by a Circular 831/1/2006-C.X. dated 26.07.2006 wherein it has been clarified that the sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire as per the amendment took place in the Budget 2004. Further vide Notification No.28/2010-C.E. (N.T.) dated 01.09.2010 it has been again clarified that CENVAT credit taken by the buyer of wires upto 8.7.2004 credit cannot be denied - Decided against Revenue.

Summary

Issues:
- Appeal against allowing input credit on S.S. wires
- Interpretation of Circulars regarding payment of duty on S.S. wires
- Entitlement of buyers to take credit on duty paid S.S. wires

Analysis:
The appeal pertains to the allowance of input credit on S.S. wires by the respondent, a manufacturer of Steel Balls. The dispute arises from the procurement of S.S. wires as inputs by the respondent, who availed CENVAT credit on these wires. The issue revolves around the duty payment on S.S. wires, as the suppliers of S.S. wires were not required to pay duty due to the activity of wire drawing not amounting to manufacture. A show-cause notice was issued to the respondent for the period of June 2003 to October 2003, leading to the confirmation of demand by the adjudicating authority. However, on appeal before the Commissioner (Appeals), the adjudication order was set aside, prompting the Revenue to file appeals against this decision.

During the hearing, it was noted that Circular No. 720/36/2003/CEX-4 had initially stated that drawing of steel wire did not require duty payment, thereby implying that buyers of S.S. wire were not entitled to take credit. This circular was later superseded by Circular 831/1/2006-C.X., which clarified that the amount paid by the wire drawing unit would be treated as duty and allowed as credit to the buyer of drawn wire following an amendment in the Budget 2004. Furthermore, Notification No.28/2010-C.E. (N.T.) dated 01.09.2010 reiterated that CENVAT credit taken by buyers of wires up to 8.7.2004 could not be denied. In light of these clarifications issued by the CBEC through supplementary notifications, the issue was considered settled. Consequently, the appeals filed by the Revenue were deemed to lack merit and were dismissed. The Cross Objections filed by the respondents were also disposed of accordingly.