2014 (4) TMI 86 - AT - Central Excise

Duty demand - Denial of benefit of Cenvat credit of duty availed on HR coils and sheets - Held that - as the credits so availed has been used for payment of duty on the final product, the entire exercise is Revenue neutral and the assessee cannot be called upon to pay back Cenvat once again - Following decision of CCE Vs. Delta Corporation 2013 (2) TMI 31 - GUJARAT HIGH COURT - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit on HR coils and sheets converted into HR slitted and pickled coils.
2. Whether the activity amounts to manufacture.
3. Applicability of Tribunal decisions.
4. Revenue neutrality of the exercise.
5. Entitlement of buyers to credit.

Analysis:

1. The Commissioner confirmed duty and penalty on the appellant for denying Cenvat credit on HR coils and sheets converted into HR slitted and pickled coils, stating that the activity does not amount to manufacture, thus disallowing the credit of duty paid on the inputs.

2. The appellant's advocate argued that duty was paid on the final product cleared by the assessee, making the exercise revenue neutral. He highlighted Tribunal decisions supporting this stance, which were ignored by the adjudicating authority. The advocate emphasized the significant difference between the credit availed and duty paid by the appellant.

3. The Revenue, represented by the Joint CDR, upheld the adjudicating authority's findings, asserting that if the process does not amount to manufacture, the credit of duty paid on inputs cannot be allowed. The Revenue contended that allowing such credit would enable buyers to claim credit on the final product.

4. The appellant's advocate countered by stating that credit to buyers is admissible even if treated as clearance of the input itself, emphasizing the validity of the credit availed.

5. The Tribunal, after considering both parties' arguments, noted that numerous Tribunal decisions, supported by High Court and Supreme Court rulings, established that if credits are used for duty payment on the final product, the exercise is revenue neutral. Citing specific High Court cases, the Tribunal dispensed with the pre-deposit condition and fixed the appeal for final disposal, recognizing the substantial amount involved and the request from both sides for a swift resolution.