2014 (9) TMI 67 - AT - Central Excise

Denial of CENVAT Credit - credit on the wire rods and used in the conversion of wires - Held that - The retrospective amendment in Rule 16 is aimed at facilitating wire drawing units, which had paid a sum equal to the duty leviable on drawn wire after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage. The purpose of the amendment is to regularize credit taken at the input stage (on wire-rod), credit taken by the downstream user of drawn wire and the amount paid as central excise duty on clearance of drawn wire. In other words, wire drawing units, which had paid sum equal to duty leviable on drawn wire, would be eligible to avail the credit of duty paid on inputs and utilize the same for payment of duty on drawn wire for the period of amendment. The sum paid by the wire drawing unit in such cases will be treated as duty and shall be allowed as credit to the buyer of drawn wire in terms of the amendment. This amendment would not create any additional liability on any wire drawing unit which did not pay duty on drawn wire during the period of amendment. - Following decision of VENUS WIRE INDUSTRIES PVT. LTD. Versus COMMR. OF C. EX., RAIGAD 2007 (12) TMI 332 - CESTAT, MUMBAI - Decided against Revenue.

Summary

Issues:
- Appeal against the order of the Commissioner (Appeals) regarding recovery amount
- Interpretation of the Hon'ble Supreme Court decision on availing credit on wire rods
- Application of the amendment to Rule 16 of the Central Excise Rules and Taxation Laws (Amendment) Act, 2006
- Comparison with the decision in the case of Venus Wire Industries Pvt. Ltd. Vs. CCE

Analysis:
The Revenue filed an appeal against the order of the Commissioner (Appeals) which directed the recovery of a reduced amount compared to the initial demand. The demand was based on the respondent availing credit on wire rods used in the conversion of wires, treated as excise goods. The Tribunal referred to the Hon'ble Supreme Court's decision and the amendment to Rule 16 to analyze the issue.

The Tribunal highlighted the case of Venus Wire Industries Pvt. Ltd. Vs. CCE where a similar demand was dropped due to the retrospective amendment to Rule 16. The Tribunal quoted a Board Circular clarifying the purpose of the retrospective amendment, emphasizing regularizing credit at different stages of production. The Tribunal concluded that the amendment aimed to allow credit for duty paid on inputs and utilize the same for payment of duty on the final product, ensuring no additional liability on units not paying duty during the amendment period.

Considering the decision in the Venus Wire Industries case and the clarification provided by the Board Circular, the Tribunal found no reason to interfere with the order of the Commissioner (Appeals). Consequently, the appeal by the Revenue was dismissed, and the cross-objection filed by the respondent was disposed of. The Tribunal's decision was based on the applicability of the amendment to Rule 16 and the consistent interpretation of the law in similar cases.

In conclusion, the Tribunal's judgment relied on the interpretation of legal provisions, precedents, and relevant circulars to determine the validity of the demand raised by the Revenue. The application of the amendment to Rule 16 played a crucial role in deciding the outcome of the appeal, ensuring consistency in the treatment of credit availed on inputs and final products in excise matters.