2015 (1) TMI 1101 - AT - Central Excise

Benefit of CENVAT Credit - Whether the appellant is eligible to avail cenvat credit of central excise duty paid on P.u. foam blocks which are inputs for their final product which is described by them as P.U. foam sheet - Held that - appellant is procuring P.U. foam blocks which are covered under Chapter Heading No. 3920 or 3921, on which central excise duty has been discharged by the manufacturer. We also note that the products as got manufactured by the appellant were classified by them under Chapter Heading No. 3926. After classifying the said product under Chapter Heading 3926, the appellant had discharged central excise duty which has been accepted by the Revenue. In the entire proceedings before us, we find that the classification described by the appellant as to the products which are falling under Chapter Heading 3926, remains the same and is not disturbed by the adjudicating authority or the first appellate authority. This itself is an indicator that the original input, P.U. foam block, has undergone change and is now other than the inputs which were procured by the appellant. When the appellant is discharging central excise duty on the products which they consider as manufactured products and the Revenue authorities also having accepted the central excise duty, in our considered view, the appellant eligible, rightfully to avail cenvat credit of the central excise duty paid on the inputs. This is the settled law. - the judgment of the Hon ble High Court of Gujarat in the case of Creative Enterprises (2008 (7) TMI 311 - GUJARAT HIGH COURT) is directly on the issue and it was held in favour of the assessee inasmuch as the ratio stated is when an assessee considers the activity as amounting to manufacture, then the question of availing cenvat credit cannot be denied by holding that there is no manufacture.- impugned order is unsustainable and liable to be set aside - Following decision of CCE, Pune-III vs. Ajinkya Enterprises 2012 (7) TMI 141 - BOMBAY HIGH COURT - Decided in favour of assessee.

Summary

Issues involved:
Whether the appellant is eligible to avail cenvat credit of central excise duty paid on P.U. foam blocks used as inputs for their final product described as P.U. foam sheet.

Analysis:
The appeal was filed against an Order-in-Appeal where the appellant, a central excise registered unit, manufactured P.U. form sheets and availed cenvat credit. The lower authorities contended that the appellant's activity did not amount to manufacturing, leading to a show cause notice for demand confirmation, interest, and penalty imposition. The adjudicating authority upheld the demand and penalty. The appellant appealed, but the first appellate authority rejected it. The appellant argued that they paid central excise duty on the articles manufactured from P.U. foam blocks, making cenvat credit valid. They cited court decisions supporting their position. The departmental representative argued that cutting P.U. foam blocks did not constitute manufacturing, referring to relevant court decisions.

The Tribunal considered the submissions and records, focusing on whether the appellant could claim cenvat credit on central excise duty paid for P.U. foam blocks used in manufacturing P.U. foam sheets. It was noted that the appellant procured P.U. foam blocks on which duty was paid and classified the final products under a different heading after manufacturing. The classification remained unchanged throughout the proceedings, indicating a transformation of the original input. The Tribunal concluded that since the appellant paid duty on the final products and the Revenue accepted it, the appellant was entitled to cenvat credit, in line with established law.

The Tribunal agreed with the appellant's reliance on court decisions supporting their position, emphasizing that once an assessee considers an activity as manufacturing and pays duty accordingly, denying cenvat credit on the basis of no manufacturing activity is unfounded. The Tribunal found the judgments cited by the departmental representative less persuasive compared to those supporting the appellant's case. Consequently, the impugned order was deemed unsustainable and set aside, allowing the appeal in favor of the appellant.