2012 (12) TMI 943 - AT - Central Excise

CENVAT Credit - GTA Services - Held that - it is not denied that glass cullets have been used in the manufacture of lead oxide and zinc oxide by the appellant. Since the glass cullets are used in manufacture of zinc oxide and lead oxide service tax in respect of GTA services used for transportation of the glass cullets cannot be denied. Therefore, the impugned order denying credit of ₹ 18,661/- in respect of GTA service availed by the appellant for transport of glass cullets is not sustainable and is liable to be set aside - Moreover, even if process undertaken is treated as not amounting to manufacture, since undisputedly the appellant have paid duty on 25 kg. pack, which is more than the cenvat credit availed the payment of duty has to be treated as reversed of cenvat credit as the Department cannot proceed to demand cenvat credit again in respect of input - Decided in favour of assessee.

Summary

Issues:
1. Whether repacking of cerium chloride from bulk packs to 25 kg. packs amounts to manufacture for the purpose of availing cenvat credit?
2. Whether denial of cenvat credit on certain input services, including GTA service for transportation of glass cullets, is justified?

Analysis:
1. The appellant, a manufacturer of zinc oxide and lead oxide, imported cerium chloride in bulk packs and repacked it into smaller 25 kg. packs. The appellant claimed this repacking activity as manufacture under Chapter note 9 to Chapter 28 of the Central Excise Tariff. The department issued a show cause notice denying cenvat credit of Rs. 2,62,433/- on cerium chloride, along with other credits, leading to a penalty. The Assistant Commissioner confirmed the denial, which was upheld by the Commissioner (Appeals). The appellant argued that their process constituted manufacture, relying on case law and contending that even if not considered manufacture, the duty paid on 25 kg. packs should be treated as reversal of cenvat credit. The Tribunal held that the repacking of cerium chloride into retail packs qualifies as manufacture under Chapter note 9, regardless of the end consumer being retail or industrial. The Tribunal also noted that since duty was paid on the retail packs, the cenvat credit was correctly availed, setting aside the impugned order and allowing the appeal.

2. Regarding the denial of cenvat credit of Rs. 18,661/- on GTA service used for transporting glass cullets, the Tribunal found that the glass cullets were indeed used in manufacturing zinc oxide and lead oxide. As the service tax on GTA services for transporting these cullets is integral to the manufacturing process, the denial of credit was deemed unsustainable. Therefore, the impugned order denying credit for GTA services was set aside.