2015 (12) TMI 936 - AT - Central Excise

Denial of CENVAT Credit - activity of conversion of rods and rounds does not amount to manufacture and as such, the appellant should not have paid the duty on the final product - Held that - Case of Super Forgings and Steels Ltd, vs. CCE, Chennai 2007 (7) TMI 77 - CESTAT, CHENNAI , CESTAT held that there is no question of recovery of Cenvat credit which has been utilized towards payment of duty of the final products even when the process did not amount to manufacture. In the case of CCE, Indore vs. M.P. Telelinks Ltd. 2004 (1) TMI 280 - CESTAT, NEW DELHI CESTAT held that if the department levies and collects the Central Excise duty on the goods remove from the factory, they can not claim for the purpose of allowing Cenvat credit that the process of manufacture had not taken place. Similar view was held by CESTAT in the case of CCE, J&K Jammu Vs. North Sun Enterprises Industrial Estate 2012 (8) TMI 691 - CESTAT, NEW DELHI . - Decided in favour of assessee.

Summary

Issues involved:
Denial of Cenvat credit for duty paid on final product 'bright bars' due to conversion activity not constituting manufacture.

Analysis:

1. The appellants were denied Cenvat credit of a specific amount utilized for duty payment on their final product 'bright bars' because the conversion of rods and rounds was deemed not constituting manufacture. However, the Tribunal found no justification for the denial of credit since the appellants had discharged the duty liability after availing the credit. The Tribunal referred to a previous decision in the case of R.B. Steel Services and others vs. CCE, Rohtak, where a similar issue was addressed, supporting the appellants' position.

2. The Tribunal highlighted the legal precedent set by the Hon'ble Supreme Court in the case of Vee Kayan Industries Vs. Collector of CE, Chandigarh, which established that the process of converting black bars/rods into bright bars does not amount to manufacture. This principle was further upheld by CESTAT in subsequent cases. The Tribunal emphasized that the issue of whether the conversion process constituted manufacture was no longer open for debate during the relevant period, citing various cases where similar conclusions were reached.

3. Referring to the case of Plyrub Extrusions (I) Pvt. Ltd. Vs. CCE Belapur, the Tribunal reiterated that if an activity amounts to manufacture, the duty paid for clearance should be treated as a reversal of Cenvat credit. Drawing from the Ajinkya Enterprises case affirmed by the Hon'ble Bombay High Court, the Tribunal concluded that the appellants were indeed entitled to Cenvat credit. Consequently, the impugned order was set aside, and the appeal was allowed with any consequential relief.

4. Given that the issue had been previously settled, the Tribunal dispensed with the pre-deposit condition of duty and penalty. The impugned order was set aside, and the appeal was allowed with consequential relief for the appellants. The stay petition and appeal were disposed of accordingly, bringing the matter to a close.

This detailed analysis of the judgment showcases the Tribunal's thorough consideration of legal precedents and the specific circumstances of the case, ultimately leading to a favorable outcome for the appellants regarding the denial of Cenvat credit.