2016 (3) TMI 1330 - AT - Central Excise

CENVAT Credit - inputs/capital goods - denial on the ground that drawing of wires from the input namely, Wire Roads is not amounting to manufacture - Held that - It is an admitted fact that even though the activity undertaken by the appellant does not amount to manufacture, but the Central Excise duty paid on removal of H.B. Wire and Binding Wire has been accepted by the department and retained as Government dues. Issue is no more res-integra and decided in the case of R.B. Steel Services and Ors. v. CCE, Rohtak 2015 (1) TMI 292 - CESTAT NEW DELHI , where it was held that Cenvat credit cannot be denied, which has been utilized towards payment of duty on the final products, even when the process does not amount to manufacture. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues involved: Central Excise duty on drawing "H.B. Wire" and "Binding Wire"; Cenvat credit on inputs and capital goods; Whether drawing of wires amounts to manufacture; Applicability of Central Excise duty; Validity of Cenvat credit.

Analysis:

1. Drawing of wires not amounting to manufacture:
The appellant engaged in drawing "H.B. Wire" and "Binding Wire" under Chapter sub-heading No. 7217.90 of the Central Excise Tariff Act, 1985. The Central Excise Department objected to the appellant availing Cenvat credit on inputs and capital goods, arguing that drawing wires from the input "Wire Roads" does not constitute manufacture, thus not attracting Central Excise duty. However, it was acknowledged that the Central Excise duty paid on the removal of these wires was accepted and retained by the department as Government dues.

2. Legal precedent and applicability of Cenvat credit:
The Tribunal referred to a previous decision in the case of R.B. Steel Services and Ors. v. CCE, Rohtak, where it was held that Cenvat credit cannot be denied, even if the process does not amount to manufacture, as long as the credit has been utilized towards duty payment on final products. Based on this precedent, the Tribunal concluded that the appellant was entitled to avail the Cenvat credit, and the Central Excise duty paid on the wires was valid.

3. Decision and conclusion:
Given the established legal position and the precedent set by the Tribunal, it was determined that the impugned order had no merit. The appeal was allowed in favor of the appellant, emphasizing that Cenvat credit cannot be denied when utilized for duty payment on final products, irrespective of whether the process amounts to manufacture or not.

In summary, the judgment clarified the applicability of Central Excise duty on the drawing of wires, upheld the right of the appellant to avail Cenvat credit on inputs and capital goods, and relied on legal precedent to support the decision in favor of the appellant.