2017 (7) TMI 478 - AT - Central Excise

CENVAT credit - manufacture of Nuts and Bolts - process not amounting to manufacture - The department s case is that since the activity of bringing nuts and bolts cleaning, testing and buttoning does not amount to manufacture, the appellant is not entitled for the CENVAT credit - Held that - Rule 16 stipulates that even though the activity does not amount to manufacture but if the assessee cleared the goods on payment of duty which is equal to Cenvat Credit, the cenvat credit on the bought out duty paid goods is admissible, as if the same is input - the appellant though engaged in the manufacture of Nuts and Bolts have also bought out duty paid Nuts and Bolts and thereafter they have carried out certain activities such as cleaning, testing and buttoning and cleared thereafter on payment of duty which is equal to the CENVAT credit. In this fact the credit is admissible in view of the Rule 16 - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to Cenvat credit for activities involving bought out duty paid goods.

Analysis:
The case involved the appellant engaged in the manufacture of Nuts and Bolts who purchased goods on payment of duty, carried out activities like cleaning, testing, and buttoning, and reissued them after paying duty equal to the Cenvat credit availed on the bought out goods. The department contended that since these activities did not amount to manufacturing, the appellant was not entitled to Cenvat credit.

The appellant argued that Rule 16 of the Central Excise Rules, 2002 covered their activities, allowing Cenvat credit even if the activities did not constitute manufacturing. They cited various judgments in support of their claim. On the other hand, the Revenue maintained that Cenvat credit was only admissible to manufacturers undertaking manufacturing activities, not for trading purposes. They cited judgments to support their stance.

Upon considering the submissions, the tribunal found that the appellant, despite being a manufacturer of Nuts and Bolts, had also engaged in activities involving bought out duty paid goods before reissuing them after paying duty equal to the Cenvat credit. Referring to Rule 16, the tribunal highlighted that even if the process did not amount to manufacturing, if the goods were cleared on payment of duty equal to the Cenvat credit, the credit on bought out duty paid goods was admissible as if they were inputs. Consequently, the tribunal ruled in favor of the appellant, setting aside the impugned order and allowing the appeal.