2015 (6) TMI 864 - AT - Central Excise

CENVAT Credit - Assessee cleared its manufactured footwear on payment of excise duty - Held that - Issue herein is squarely covered by earlier order of the Tribunal in assessee s own case 2008 (1) TMI 155 - CESTAT, MUMBAI , relating to the same issue. I further find that the Ld. Commissioner (Appeals) have allowed the appeal of assessee in terms of the ruling of this tribunal in assessee s case. - Decided against Revenue.

Summary

Issues:
1. Whether the department's appeal against the Order-in-Appeal No. YG(4)4/M-I/2008 is valid.
2. Whether the assessee is eligible to avail CENVAT credit on input services and input goods.
3. Whether the Commissioner (Appeals) erred in allowing full credit of taxes paid on services used partially for manufactured goods and partially for traded goods.
4. Whether the burden of proof regarding the admissibility of CENVAT Credit lies upon the manufacturer or provider of output service.
5. Whether the Commissioner (Appeals) erred in not imposing an equal penalty to the amount of duty evaded.

Analysis:

1. The department appealed against Order-in-Appeal No. YG(4)4/M-I/2008, contending that credit can only be taken on duty paid on inputs and input services utilized in relation to the manufacture of dutiable goods. The Commissioner (Appeals) was criticized for allowing full credit of taxes paid on services used partially for manufactured goods and partially for traded goods without proper evidence to segregate the services used. The department argued that the burden of proof lies with the manufacturer or provider of output service to demonstrate the admissibility of CENVAT Credit.

2. The department further argued that the Commissioner (Appeals) failed to impose an equal penalty to the amount of duty evaded, as required by Section 11AC. The department sought to set aside the Commissioner (Appeals) order and reinstate the Order-in-Original.

3. The appellant's counsel supported the findings of the Commissioner (Appeals) and highlighted the amendment to Section 2(f) of the Central Excise Act, 1944. The counsel argued that the activity carried out by the assessee, including packing, labeling, and alteration of retail sale price, amounts to manufacture under the amended section. The counsel emphasized that the CENVAT scheme is self-contained, and to deny credit, it must be shown that the availment and utilization are not in accordance with CENVAT Rules.

4. The appellant's counsel referenced a previous order of the Tribunal in the assessee's own case, where credit on input services used in manufacture was allowed. It was clarified that input services used for trading activity would not be eligible for credit. The Tribunal noted that the issue at hand was covered by the earlier order in the assessee's case, and based on the ruling of the Tribunal, the department's appeal was dismissed, granting consequential relief to the assessee.

In conclusion, the judgment upheld the Commissioner (Appeals) decision based on the Tribunal's previous ruling in the assessee's case, dismissing the department's appeal and granting relief to the assessee.