2019 (8) TMI 1427 - AT - Central Excise

Recovery of CENVAT Credit - process amounting to manufacture or not - cutting, punching holes, galvanizing etc. - HELD THAT - The issue decided in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES 2012 (7) TMI 141 - BOMBAY HIGH COURT where it was held that once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity docs not amount to manufacture. Appeal allowed - decided in favor of appellant.

Summary

Issues involved:
1. Whether the processes undertaken by the appellant amount to manufacture under the Central Excise Act, 1944.
2. Admissibility of cenvat credit on raw materials procured by the appellant.

Detailed Analysis:
Issue 1: Whether the processes undertaken by the appellant amount to manufacture under the Central Excise Act, 1944.
The appellant had been procuring raw materials and utilizing them by cutting, punching holes, etc., to create parts of transmission line towers. The Commissioner alleged that these processes do not amount to manufacture and issued a demand notice for recovery of cenvat credit availed. The appellant argued that similar processes were considered as manufacture in a previous Tribunal case and cited the definition of manufacture under Section 2(f) of the Act. They contended that the duty paid on the finished products cleared from the factory indicated that the processes undertaken by them were manufacturing activities. The appellant also referenced a judgment by the Bombay High Court and a circular by the Board to support their argument.

Issue 2: Admissibility of cenvat credit on raw materials procured by the appellant.
The appellant argued that once they paid duty on the finished products and informed the department about the processes undertaken, any subsequent claim that these processes do not amount to manufacture should not affect the admissibility of cenvat credit on the raw materials used. They referred to a judgment by the Bombay High Court and a circular by the Board to support their position. The Revenue, on the other hand, reiterated the findings of the Commissioner.

The Tribunal analyzed the submissions and found that the processes undertaken by the appellant did amount to manufacture as per the definition in the Central Excise Act. They cited precedents from the Bombay High Court and the Karnataka High Court to support their decision. The Tribunal noted that similar demands raised by the Revenue for a subsequent period had been dropped in the appellant's own case. Consequently, the impugned order was set aside, and the appeal was allowed with consequential relief, if any, as per law. The Tribunal did not delve into the issue of whether the processes amounted to manufacture, as it became academic in light of their decision.