2014 (12) TMI 318 - AT - Central Excise

Waiver of pre deposit - Reversal of CENVAT Credit - Proceedings were initiated on the ground that there is no manufacture in respect of these two products and therefore CENVAT credit availed by the appellant is not admissible - Held that - appellants have reversed the CENVAT credit while clearing the goods along with locks, in our opinion, at this stage, it would be sufficient for hearing the appeal. Accordingly, there shall be waiver of predeposit of adjudged dues and stay against recovery for 180 days from the date of this order - Stay granted.

Summary

Issues:
1. Whether the process undertaken by the assessee amounts to manufacturing or trading activity.
2. Admissibility of CENVAT credit availed by the appellant.
3. Applicability of previous decisions regarding the reversal of CENVAT credit.
4. Interpretation of relevant legal provisions and case laws in the context of the present case.

Issue 1:
The case involved the question of whether the activities of the assessee, involving clearing industrial locks, hinges, and gaskets, constituted manufacturing or trading. The department argued that the process undertaken by the assessee did not result in any new product emerging and merely involved cutting gaskets to required lengths without changing their character or classification. It was contended that the inputs purchased did not require further manufacturing operations as they were final products themselves.

Issue 2:
Proceedings were initiated against the appellant on the grounds that there was no manufacturing involved in the clearance of hinges and gaskets, leading to the inadmissibility of CENVAT credit availed by the appellant. The demand for the reversal of CENVAT credit amounting to Rs. 35,30,677/- was made as a result.

Issue 3:
The appellant relied on previous decisions suggesting that the reversal of CENVAT credit at the time of goods' removal, considered not to have been manufactured, was sufficient. Reference was made to the case of Silvassa Wooden Drums Vs. CCE, Vapi [2005(184) ELT 392 (Tri. Mumbai)]. However, the respondent cited the decision of the Hon'ble Supreme Court in the case of KCP Ltd. Vs. CCE, Chennai [2013(295) ELT 353 (SC)], emphasizing that it was related to the export of goods and not directly applicable to the present case.

Issue 4:
The Tribunal analyzed the legal provisions and case laws cited by both parties, including the decision of the Hon'ble Gujarat High Court in the case of CCE, Ahmedabad-II Vs. Inductotherm (I) Pvt. Ltd. The Tribunal highlighted specific paragraphs of the decision to emphasize the importance of manufacturing activity for the admissibility of credit. The Tribunal concluded that in the present case, since the appellants had reversed the CENVAT credit while clearing the goods, it was sufficient for the appeal to be heard without the need for predeposit of adjudged dues.

Overall, the judgment addressed the intricacies of manufacturing activities, the admissibility of CENVAT credit, and the application of previous legal decisions to the specific circumstances of the case, providing a detailed analysis of each issue raised during the proceedings.