2011 (11) TMI 540 - AT - Central Excise

Availment of CENVAT Credit - One of the inputs on which Cenvat credit was availed by them was steel wire falling under Sub-heading No. 7217.90 of the Central Excise Tariff - Revenue contends that since no excise duty was payable on the wires used by the Respondent as input they could not have taken Cenvat credit of amount paid as duty on the said items - Held that - Government of India has enacted the Taxation Laws (Amendment) Act 2006 with effect from 13-7-2006 to give legal backing to excise duty paid by wire drawing units on wires drawn from wire rods during the period 29-5-2003 to 8-7-2004 and has issued Circular No. 831/18/2006-CX. dated 26-7-2006 advising that all demands of the nature being dealt with in this Appeal should be decided considering the retrospective legislation made by the Government - We have gone through the said retrospective legislation and the circular dated 26-7-2006 issued by C.B.E. & C. and we find that the demand confirmed by the Adjudicating Authority against Respondents in this case cannot survive in view of the said retrospective amendment - Decided against Revenue.

Summary

Issues:
1. Availment of Cenvat credit on steel wire used as input for manufacturing RCC poles.
2. Interpretation of Circular No. 720/36/2003-CX regarding excise duty on steel wires.
3. Demand of Rs. 8,66,436/- along with interest and penalty under Cenvat Credit Rules.
4. Appeal against the order of the Adjudicating Authority by the Respondents.
5. Legal backing provided by Taxation Laws (Amendment) Act, 2006 to excise duty on wires drawn from wire rods.
6. Circular No. 831/18/2006-CX advising on retrospective legislation for demands similar to the present case.
7. Rejection of Revenue's appeal based on retrospective amendment and circular.

Analysis:
1. The case involves the Respondents, manufacturers of RCC poles, who availed Cenvat credit on steel wire used as an input for manufacturing. The Revenue contended that drawing of steel wires from wire rods did not amount to manufacture as per Circular No. 720/36/2003-CX, leading to a Show Cause Notice demanding the availed amount of Rs. 8,66,436/-.

2. The Adjudicating Authority upheld the demand, imposing interest and penalty under Cenvat Credit Rules. However, the Commissioner (Appeals) set aside the order, relieving the Respondents from the dues. The Revenue appealed the Commissioner's decision.

3. The Tribunal noted the Taxation Laws (Amendment) Act, 2006, giving legal support to excise duty on wires drawn from wire rods during the relevant period. Circular No. 831/18/2006-CX advised on considering demands in cases like the present one in light of the retrospective legislation.

4. Upon reviewing the retrospective amendment and the circular, the Tribunal found that the demand confirmed by the Adjudicating Authority could not stand, given the retrospective nature of the legislation. Consequently, the Revenue's appeal was dismissed, upholding relief for the Respondents from the impugned order.

This judgment clarifies the legal position regarding the availment of Cenvat credit on steel wire used in manufacturing and the impact of retrospective amendments on demands related to excise duty payments. The decision underscores the importance of considering legislative changes and circulars in resolving disputes concerning tax liabilities and credits.