2016 (5) TMI 1197 - AT - Central Excise

Entitlement for availment of Cenvat credit - receipt of duty paid goods i.e. Oil Slump Body, Cylinder Head & Rover Cylinder - availed Cenvat credit thereon - reissue the same on payment of duty or for export - no manufacturing activity has been undertaken - Held that - the assesee is entitle to avail Cenvat credit on the duty paid goods even though the said duty paid goods does not undergo manufacturing process. The only condition is that if the duty paid goods is cleared after process which amounts to manufacture, the assesee is required to pay duty on the transaction value and if the goods are cleared without manufacturing process the duty which required to be paid is equal to the Cenvat credit availed. Rule 16 also holds the duty paid goods as inputs therefore the Cenvat credit is admissible. Entitlement for availment of Cenvat credit - Inward GTA service - goods on which credit was allegedly wrongly taken is not input service - Held that - the goods are inputs in terms of Rule 16, therefore, the inward transportation of such goods shall be undoubtedly qualified as input service, even as per the interpretation drawn by the Ld. Commissioner, therefore the credit on inward GTA service in respect of transportation of the goods namely Oil Slump Body, Cylinder Head & Rover Cylinder is also admissible. Since we are of the view that Cenvat credit in respect of the goods is admissible in terms of Rule 16 and consequently Cenvat credit is admissible on GTA service, we are not going into other issues raised by the Ld. Counsel. The impugned order is set aside. - Decided in favour of appellant with consequential relief

Summary

Issues involved:
1. Disallowance of Cenvat Credit on duty paid on inputs and service tax on inward carriage.
2. Denial of Cenvat credit due to lack of manufacturing activity.
3. Recovery of interest and imposition of penalty.
4. Interpretation of Rule 16 of Central Excise Rules, 2002 regarding Cenvat credit on duty paid goods.
5. Admissibility of Cenvat credit on inward GTA service.

Analysis:

1. The Commissioner disallowed Cenvat Credit on duty paid inputs and service tax on inward carriage, ordering recovery under Rule 14 of Cenvat Credit Rules, 2004. The appellant, engaged in Automotive Casting manufacture, received goods from a sister concern without manufacturing but undertook processes like fitting, painting, testing, and packing. The Commissioner denied credit citing lack of manufacturing activity, leading to disallowance.

2. The appellant argued that their activities constituted manufacturing under Rule 16 of Central Excise Rules, 2002, supported by case laws. They contended that even if not manufacturing, the clearance of goods should be treated as clearance of inputs, justifying the Cenvat credit availed. They highlighted that excise duty was paid on cleared goods, rendering the demand unsustainable, citing relevant judgments.

3. The Revenue reiterated the impugned order, but the Tribunal found the appellant's activities fell under Rule 16, allowing Cenvat credit on duty paid goods even without manufacturing. The Tribunal held that the denial of credit on inward GTA service was unfounded, as per Rule 16, considering the goods as inputs. The appeal was allowed, setting aside the impugned order, with consequential relief.

4. The Tribunal's analysis focused on Rule 16's applicability, affirming the admissibility of Cenvat credit on duty paid goods and inward GTA service. The judgment emphasized that the goods, even without manufacturing, qualified as inputs, entitling the appellant to Cenvat credit. The decision provided clarity on the interpretation of Rule 16 and upheld the appellant's position, ultimately allowing the appeal.

This detailed analysis covers the issues raised in the judgment, highlighting the arguments presented by both parties and the Tribunal's reasoning leading to the final decision.