2016 (12) TMI 1059 - AT - Central Excise

Manufacture - cutting and slitting of H.R. Coils/Chequered Coil - Held that - reliance placed on the decision of the case of Commissioner of Central Excise, Pune-III vs. Ajinkya Enterprises 2013 (6) TMI 610 - CESTAT MUMBAI , where it was held that the appellants were undertaking composite activity of de-coiling of HR/CR coils thereafter cutting and slitting into specific sizes and after that pickling and oiling taken place, which was clarified by the department only on 24-6-2010 saying that the said activity does not amount to manufacture - Circular No.607/44/2001-CX dated 13.12.2001 clarifies that the assessee would be entitled to the facility of Rule 16 of Central Excise Rules, 2002 - appeal is allowed - decided in favor of appellant-assessee.

Summary

Issues:
- Entitlement to CENVAT Credit under Rule 16(1) and Rule 16(2) of Central Excise Rules, 2002 for cutting/slitting H.R. Coils/Chequered Coils.
- Whether cutting H.R. Coils/C.R. Coils into metal bars/metal sheets amounts to manufacture.
- Applicability of Circular No.607/44/2001-CX and Circular No.911/1/2010-CX.
- Interpretation of Rule 16 of Central Excise Rules, 2002.
- Precedents set by various case laws.

Analysis:

The case involved a dispute regarding the entitlement of CENVAT Credit under Rule 16(1) and Rule 16(2) of the Central Excise Rules, 2002 for the process of cutting/slitting H.R. Coils/Chequered Coils. The Revenue contended that this activity did not amount to manufacture, thus denying the Appellant the benefit of Rule 16 provisions. The Appellant had paid Central Excise duty on the coils brought into the factory and was availing CENVAT Credit. The Revenue's demand of denying CENVAT Credit amounting to a substantial sum was based on the assertion that manufacturing activity was a prerequisite for availing Rule 16 benefits.

The Tribunal, after considering the arguments and precedents, notably the case laws of Ajinkya Enterprises, Premier Conveyors, and Markfed HDPE Sacks Plant, found in favor of the assessee. The Tribunal referred to Circular No.607/44/2001-CX, which clarified the interpretation of Rule 16, allowing the receipt of duty-paid goods in the factory for specified purposes, regardless of the manufacturer. Additionally, Circular No.911/1/2010-CX provided instructions for situations where no manufacturing activity was subsequently found, allowing for regularization of CENVAT Credit availed. The Tribunal also highlighted the observations of the Bombay High Court in the case of Commissioner of Central Excise, Pune-III Vs. Ajinkya Enterprises, emphasizing that the activity of cutting/slitting coils could constitute manufacturing, especially when additional technical processes were involved.

Based on the above analysis and precedents, the Tribunal set aside the impugned order, allowing the appeal with consequential relief. The decision was pronounced in open court on 16.12.2016. The judgment underscores the importance of interpreting the provisions of the Central Excise Rules in a manner that upholds the principles of justice and fairness, as demonstrated through the application of relevant case laws and circulars to resolve the dispute at hand.