2014 (2) TMI 696 - AT - Central Excise

Waiver of the pre-deposit - Availment of cenvat credit of CVD, Education Cess, S.H.E. Cess and additional duty paid - Lower authorities have held that appellant herein having exported the pipes and got the same calibrated from the units situated abroad cannot avail cenvat credit the duty of customs paid on importation therefore, credit of duty paid cannot be availed by the appellant as the process of calibration carried out on the pipes by the units situated does not amount to manufacture - Held that - appellant herein undisputedly discharged appropriate customs duty, CVD, and additional duty on the pipes imported by them. It is also not disputed that the appellant utilized/used these calibrated pipes for further manufacturing of their final products and paid proper duty on such final products. It is also not disputed that the appellant had filed bills of entry, when the calibrated pipes were imported and the customs authorities have assessed the bills of entry. On the face of such a factual matrix both the lower authorities have over looked the legal provision inasmuch as duty paid as CVD is eligible to be availed as cenvat credit; if an assessee is able to show that the inputs/capital goods were utilised/used, directly or indirectly in the manufacture of final products on discharge of appropriate duty. That the appellant had utilized/used the calibrated pipes in the manufacture of their final products being undisputed, in our view, the lower authorities have erred in denying the cenvat credit of duty paid as CVD, Education Cess, S.H.E. Cess and additional of customs - Decided in favour of assessee.

Summary

Issues:
- Availability of cenvat credit on duty paid for imported pipes after calibration.

Analysis:
The judgment by the Appellate Tribunal CESTAT AHMEDABAD, delivered by Mr. M.V. Ravindran, addressed the issue of whether an appellant could avail cenvat credit on duty paid for imported pipes after calibration. The appellant had imported pipes and availed cenvat credit on various duties paid, including CVD, Education Cess, S.H.E. Cess, and additional duty. The lower authorities had denied the cenvat credit, stating that the calibration process carried out on the pipes did not amount to manufacture. However, the Tribunal disagreed with this reasoning. It noted that the appellant had paid appropriate customs duty on the imported pipes, used these calibrated pipes in the manufacturing of final products, and discharged proper duty on the final products. The Tribunal emphasized that if an assessee can demonstrate that inputs were used in the manufacture of final products, cenvat credit should be allowed. Since the appellant had utilized the calibrated pipes in the production process, the denial of cenvat credit by the lower authorities was deemed erroneous.

The Tribunal found that the lower authorities had overlooked the legal provision that allows cenvat credit on duty paid if the inputs or capital goods are used in the manufacturing process. As the appellant had utilized the calibrated pipes in the production of final products and had paid appropriate duties, the denial of cenvat credit on CVD, Education Cess, S.H.E. Cess, and additional duty was deemed unjustified. Therefore, the Tribunal allowed the appeal, set aside the impugned order, and granted consequential relief to the appellant. The judgment clarified that the duty paid on imported goods, when used in the manufacturing process, is eligible for cenvat credit, emphasizing the importance of demonstrating the utilization of inputs in the production of final goods to claim such credit.