2012 (6) TMI 750 - AT - Central Excise

Waiver of the pre-deposit - Availment of ineligible cenvat credit - Assessee drawing wires from wire rods - Held that - Board s circular dated 16.02.01 during the material period was holding that the activity of drawing wire would amount to manufacture cannot be disregarded by the lower authorities and can be said that during the material period appellant was manufacturing the final products. It is a settled law that Board s circular is binding on the lower authorities and adjudicating authority, in our considered view, has erred in coming to a conclusion that the appellant is not eligible for the cenvat credit of the duty paid on inputs. We also note that the CBEC vide circular dated 29.05.03 has withdrawn the said circular which would leave the period after 29.05.03 in the category of the drawing of wire would not amount to manufacture. We find that by retrospective amendment this was rectified holding that wire drawing units during the period 29.5.03 to 08.7.04 (both days inclusive) it has cleared the final products i.e. drawn wire on payment of duty, at appropriate rate, then the amount paid on such goods shall be allowed as cenvat credit to the recipient of the said drawn wire. The corollary of this retrospective amendment would be that the appellant herein if has discharged the duty liability, then he is eligible to avail the cenvat credit during the material period - Following decision of COLLECTOR OF CENTRAL EXCISE Versus TECHNOWELD INDUSTRIES 2003 (3) TMI 123 - SUPREME COURT OF INDIA - Decided in favour of assessee.

Summary

Issues:
Waiver of pre-deposit of confirmed amounts for ineligible cenvat credit due to manufacturing activity of drawing wires from wire rods.

Analysis:
The stay petition sought the waiver of pre-deposit for the amounts confirmed as ineligible cenvat credit due to the appellant's activity of drawing wires from wire rods, contending they were not engaged in manufacturing any items. The Tribunal, after hearing both sides, decided to dispose of the appeal immediately, as the issue was narrow. The appellant's counsel highlighted that during the period in question (April 2001 to November 2003), the appellant considered the drawn copper wires as final products, manufacturing them from copper rods and availing cenvat credit. The adjudicating authority, however, deemed the activity not amounting to manufacturing, leading to the denial of cenvat credit. The counsel referenced relevant circulars and judicial decisions to support their argument. The Senior Departmental Representative reiterated the lower authorities' findings.

The Tribunal acknowledged that during the disputed period, the appellant was drawing wires from wire rods, a process considered manufacturing activity at that time. The Board's circular from 16.02.01, in force during the material period, deemed wire drawing as manufacturing. The Tribunal emphasized that the lower authorities erred in denying cenvat credit based on the changed circular of 29.05.03, which withdrew the earlier stance. The retrospective amendment via Section 89 of the Finance (2) Act, 2004, rectified this, allowing cenvat credit for the relevant period if duty liability was discharged. The Tribunal held that the appellant, having cleared the final products and paid duty, was entitled to cenvat credit during the material period, settling the issue in favor of the assessee.

Therefore, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.