2017 (10) TMI 204 - AT - Central Excise

CENVAT credit - denial of credit on the ground that no manufacturing activity was carried out by the appellants on the finished products and the appellant also not carried out any process specific under Rule 16 - Held that - From Rule 16, it is seen that the assesee shall be allowed the Cenvat Credit in respect of duty paid on the goods received in the factory for the purpose of re-made, refined, re-conditioned or for any other reasons. As per sub-rule (2) of Rule 16, it is provided that when such duty paid goods is cleared by the assesee under two situations (i) the activity undertaken by the appellant does not amount to manufacture (ii) the activity undertaken by the appellant is amounting to manufacture. In both the above situation, the appellant can take Cenvat Credit on the duty paid goods - In the facts of the present case, the appellants have brought the duty paid goods from various vendors and the same were repacked as per the requirements of export and goods were exported, even though the activity was not amount to manufacture, they have discharged excise duty. Therefore, in our view, the appellants have complied with the provisions of Rule 16 (1) and (2) - appeal allowed - decided in favor of appellant.

Summary

Issues:
Cenvat Credit on duty paid finished goods for export under the scheme of rebate - Admissibility under Rule 2 of Cenvat Credit Rules, 2002 and Rule 16 of Central Excise Rules, 2002.

Analysis:
The case involved the appellants engaged in manufacturing biscuits availing Cenvat Credit on duty paid goods for export under the rebate scheme. The department contended that since no manufacturing activity was undertaken while exporting, the Cenvat Credit was inadmissible under Rule 2 of Cenvat Credit Rules, 2002. The appellants argued that Rule 16 of Central Excise Rules, 2002 allowed Cenvat Credit on duty paid finished goods received in the factory for re-making, refining, re-conditioning, or any other reason, which included repacking for export. They cited relevant judgments supporting their position.

The Revenue reiterated its stance, emphasizing that the appellants did not undertake any process specified under Rule 16 or similar processes like re-making, refining, or re-conditioning. They referred to judgments to support their argument.

Upon considering both sides' submissions, the Tribunal analyzed Rule 16 of Central Excise Rules, 2002. It noted that the rule allowed Cenvat Credit on duty paid goods received in the factory for various reasons, not limited to specific processes like re-making or refining. The Tribunal found that the appellants repacked duty paid goods for export, complying with Rule 16(1) and (2). The Tribunal cited judgments where Cenvat Credit was allowed in similar circumstances, supporting the appellants' position.

The Tribunal concluded that the appellants correctly availed Cenvat Credit under Rule 16 of Central Excise Rules, 2002. They set aside the impugned order and allowed the appeal, emphasizing the appellants' compliance with the relevant provisions.