2015 (12) TMI 1349 - AT - Central Excise

Denial of CENVAT Credit - Credit availed on MS wire rods and various chemicals - Held that - After the judgment of the Apex Court in the case of Technoweld Industries - 2003 (3) TMI 123 - SUPREME COURT OF INDIA , the mere drawl of wire from wire rods does not amount to manufacture. Accordingly, CENVAT Credit availed during the period wherein the activity undertaken by the appellant will not get covered as the activity get manufactured, CENVAT Credit was correctly sought to be reversed. - Revenue is incorrect inasmuch as during the relevant period the issue was adjudicated before the various forums. Legislature has passed the Taxation Laws (amendment) Rules, 2005 wherein retrospective amendment was introduced to settle this kind of situation. - Board has specifically stated that the amendment has regularized the credit taken at the input stage (wire rods) and the credit taken by the downstream user who draws the wire. In our view as per the Board s Circular, the demands raised on the appellant herein is incorrect and the impugned order needs to be set aside - Decided in favour of assessee.

Summary

Issues:
1. Eligibility of CENVAT Credit on inputs used for drawing MS wires.
2. Interpretation of manufacturing activity for CENVAT Credit availed.
3. Impact of retrospective amendments on CENVAT Credit regularization.

Analysis:
1. The issue in this case revolves around the eligibility of CENVAT Credit availed on MS wire rods and chemicals used by the appellant for drawing wires during a specific period. The Revenue contended that drawing wires from rods does not constitute manufacturing post a Supreme Court judgment. Consequently, the Revenue sought to reverse the CENVAT Credit availed during this period. The appellant argued that subsequent amendments and circulars regularized such credits, citing the Taxation Laws (Amendment) Rules, 2005. The Tribunal analyzed the legislative changes and circulars to evaluate the correctness of the demands raised.

2. The Tribunal found that the Revenue's stance was incorrect as the legislative amendments, particularly the Circular issued by CBEC, clarified the regularization of credits at the input stage and for downstream users drawing wires. The Circular explicitly mentioned that the retrospective amendment aimed to facilitate wire drawing units in availing credits and regularizing payments made as central excise duty. The Tribunal emphasized that the demands raised on the appellant were unfounded in light of the Circular's provisions and the legislative intent behind the amendments. The Tribunal referenced a previous case where a similar view was upheld based on the CBEC Circular.

3. Ultimately, the Tribunal deemed the impugned order unsustainable and set it aside, allowing the appeal with any consequential relief. The decision was based on the interpretation of the legislative changes, specifically the Circular's guidance on regularizing CENVAT Credits for wire drawing units. The Tribunal's ruling highlighted the importance of legislative amendments in clarifying and rectifying issues related to CENVAT Credits and manufacturing activities, ensuring compliance and fairness in taxation matters.