2016 (1) TMI 476 - AT - Central Excise

Cenvat credit on the quantity of Dies Block - according to the Department, Dies Block, were used exclusively in the manufacture of exempted goods viz. Aluminium Road Wheels and cleared without payment of duty to the defence establishment in terms of Notification No. 4/2006-C.E. - Held that - the invoices No. 90073912 and 90076768 were indicating discharge of Central Excise duty @ 14% for the clearance of the final products manufactured out of Die No. 08008D when final goods were cleared as spares. - the very same final product when they are cleared as parts of original equipment, no duty is discharged. The entire exercise which was to be undertaken by the lower authorities to find out whether the same are manufactured and cleared on payment of duty as well as without payment of duty, was not properly addressed - Cenvat Credit allowed - Decided in favor of assessee.

Summary

Issues:
Eligibility for Cenvat credit on "Dies Block" used in manufacturing exempted goods.

Analysis:
The appeals challenged Orders-in-Appeal regarding the eligibility for Cenvat credit on the quantity of "Dies Block" used in manufacturing "Dies" exclusively for exempted goods, "Aluminium Road Wheels," cleared without duty payment to the defense establishment. The adjudicating authority confirmed demands with penalties, upheld by the first appellate authority.

The appellant argued that the "Dies Block" used as input had Central Excise duty paid and were used to manufacture "Dies," further used in making "Aluminium Road Wheels." They provided evidence of duty payment on these wheels and highlighted technical differences in the "Dies Block" for different parts. The Department's report confirmed the use of "Dies Block" in exempted goods but failed to consider the duty payment evidence.

The Tribunal considered the benefit of Cenvat credit on "Dies Block" used in manufacturing exempted "Dies" for "Aluminium Road Wheels." The appellant cleared final products to defense without duty, availing Notification benefits. The lower authorities denied credit based on the "Dies" being used exclusively for exempted goods, ignoring duty payment evidence for final products cleared as spares.

The Tribunal found the lower authorities' denial of Cenvat credit on "Dies" erroneous as duty was discharged for final products cleared as spares. The technical necessity of different numbering for parts used in manufacturing "Aluminium Road Wheels" for tanks was acknowledged. The Tribunal set aside the order, deeming the denial of Cenvat credit unsustainable and allowed the appeals.

In conclusion, the Tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeals on 2-7-2015.