2017 (9) TMI 1474 - AT - Central Excise

CENVAT credit - inputs - inputs used in manufacture of dutiable finished products subsequently exempted from payment of duty - Held that - the issue is no more res integra in view of the decision of the Larger Bench of the Tribunal in the case of HMT Vs. Commr. of Central Excise, Panchkula 2008 (10) TMI 54 - CESTAT, NEW DELHI , where it has been held that when the input credit legally taken and utilized on the dutiable final product, need not be reversed on the final product becoming exempt - credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues: Admissibility of CENVAT Credit on inputs used in the manufacture of dutiable finished products subsequently exempted from duty.

Analysis:
1. Facts of the Case: The appellant, engaged in manufacturing M.S. Wire, Wire Nails, and Annealed-Wire, cleared goods on payment of duty. Following a Supreme Court decision and circulars clarifying that drawing wire from wire rods does not amount to manufacture, the appellant stopped duty payment on the final product.

2. Legal Issue: The main issue was the admissibility of CENVAT Credit on inputs used in manufacturing dutiable finished products that were later exempted from duty due to the Supreme Court decision.

3. Tribunal's Finding: The Tribunal referred to a precedent where it was held that input credit legally taken and utilized on dutiable final products need not be reversed if the final product becomes exempt from duty. Citing the decision of the Larger Bench of the Tribunal, the impugned order was set aside, and the appeal was allowed.

4. Decision Basis: The decision was based on the legal principle established by the Larger Bench of the Tribunal, which was upheld by the High Court. The Tribunal found that the issue was no longer res integra in view of the precedent cited, leading to the allowance of the appeal.

5. Conclusion: The Tribunal's decision favored the appellant, allowing the appeal and setting aside the impugned order regarding the admissibility of CENVAT Credit on inputs used in manufacturing products exempted from duty. The legal interpretation based on established precedents played a crucial role in the final judgment.