2015 (3) TMI 514 - AT - Central Excise

Denial of CENVAT Credit - provisions of Rule 12 of the Cenvat Credit Rules, 2002 read with Section 11A of the Central Excise Act, 1944 - equivalent penalty under Section 13 - Held that - In view of the specific provisions of law which provided for payment of duty on wires and taking of CENVAT Credit of the duty so paid during the period prior to 8.7.2004, the credit availed by the appellant in such case is in accordance with law and, therefore, the appellant has rightly availed the credit. Accordingly, I set aside the impugned order - Decided in favour of assesse.

Summary

Issues:
- Denial of CENVAT Credit under Rule 12 of Cenvat Credit Rules, 2002
- Interpretation of 'manufacture' in light of Supreme Court decision
- Validity of show-cause notice and subsequent adjudication
- Applicability of retrospective amendments to Central Excise Rules, 2002
- Legality of CENVAT Credit availed by the appellant

Analysis:
The judgment revolves around the denial of CENVAT Credit to M/s Prominence Electric (India) Pvt. Ltd. under Rule 12 of the Cenvat Credit Rules, 2002. The Commissioner of Central Excise (Appeals) upheld the denial based on the view that drawing wires from wire rod does not amount to 'manufacture' as per the Hon'ble Supreme Court's decision in the case of Vishwanath Industries. A show-cause notice was issued to the appellant proposing to deny CENVAT Credit amounting to &8377; 1,68,670/- for the period 29.5.2003 to 11.9.2003. The notice was adjudicated, and the demand was confirmed along with interest, which was later rejected by the lower appellate authority, leading to the appeal.

The appellant argued that subsequent amendments to Rule 16 of the Central Excise Rules, 2002, specifically under Section 39 of the Taxation Law (Amendment) Act, 2006, and Notification No. 28/2010-CE (NT) dated 1.9.2010, allowed for wire drawing units to be treated as assesses if they cleared wires on payment of duty. Referring to the decision of the Hon'ble High Court of Gujarat in the case of Raajratna Metal Industries Ltd. Vs. Union of India, the appellant contended that retrospective amendments made wire drawing units eligible for CENVAT Credit if duty had been paid, making their credit availed legally sound.

The judgment, delivered by P R Chandrasekharan, considered the submissions of both parties and highlighted the specific provisions of law allowing for payment of duty on wires and subsequent availing of CENVAT Credit prior to 8.7.2004. It was concluded that the appellant's availing of credit aligned with the law, and therefore, the denial of credit and penalty imposed were deemed unsustainable. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief deemed necessary.