2017 (2) TMI 243 - AT - Central Excise

Cenvat credit - Plastic Wire Scrap - process of separation of copper is not amounting to manufacture - Penalty - Held that - I find that the only issue involved in the present appeals is whether the CENVAT credit availed on plastic wire and scrap, when a portion of the said scrap was sold later after retrieving the copper from it on payment of excise duty, which was twice the amount of credit on whole scrap - It is not in dispute that out of the said waste and scrap, approximately 55% was retrieved manually which does not result into manufacture , but the copper portion of the same was cleared on payment of duty - Decided in favor of the assessee.

Summary

Issues:
- Admissibility of CENVAT credit on plastic wire scrap
- Denial of credit on copper portion of inputs
- Applicability of previous judgments on the case

Admissibility of CENVAT credit on plastic wire scrap:
The case involved appeals filed by the Revenue against an Order-in-Appeal passed by the Commissioner (Appeals) concerning the availing of CENVAT credit on Plastic Wire Scrap by the Respondent-assessee. The Revenue alleged that the credit availed on the wire scrap, to the extent of copper generation, was not admissible as the copper was cleared later on payment of duty. The demands were confirmed, and penalties imposed, which led to appeals and counter-appeals. The Commissioner (Appeals) partly allowed the appeal, setting aside one demand but rejecting the other. The Tribunal initially set aside the demand of one amount but later considered the appeal involving the remaining amount. The central issue was whether the CENVAT credit on plastic wire and scrap, cleared after retrieving copper from it on duty payment, was admissible.

Denial of credit on copper portion of inputs:
The main contention was whether the credit availed on the copper wire waste and scrap should be allowed even if the separation of copper did not amount to manufacture. The Commissioner (Appeals) found in favor of the Respondent-assessee, citing previous judgments like Creative Enterprises and North Sun Enterprises Industrial Estate. These judgments emphasized that if the final product attracted duty payment, the credit on inputs could not be denied, even if the process did not amount to manufacturing. The Tribunal concurred with this view, highlighting that the duty paid on the final product should be treated as a reversal of ineligible credit on inputs.

Applicability of previous judgments on the case:
The Tribunal analyzed various case laws such as Singh Scrap Processors Ltd., PSL Holdings Ltd., and others, which established that if the process did not amount to manufacture, duty paid on the final product should be considered as reversal of ineligible credit on inputs. The Tribunal found that the reasoning in these cases applied to the present situation, where the department had accepted duty on the copper waste cleared by the appellant, despite the segregation process not constituting manufacture. As a result, the impugned order denying credit was set aside, emphasizing that more duty had been paid on the copper waste than the credit sought to be denied. The Tribunal rejected the Revenue's appeals, upholding the Commissioner (Appeals) decision.

In conclusion, the judgment focused on the admissibility of CENVAT credit on plastic wire scrap, the denial of credit on the copper portion of inputs, and the application of previous legal precedents to determine the outcome in favor of the Respondent-assessee.