2018 (4) TMI 1083 - AT - Central Excise

CENVAT credit - Acmesole Sole 2183 , Indole etc., which are their finished goods and not their input - Rule 16 of Central Excise Rules 2002 - Held that - though under Cenvat credit Rules, Cenvat credit is allowed only on input but under special provision of above Rule 16, the Cenvat credit is allowed even on the finished goods only on the condition that at the time of re-issue of such finished goods the assessee is required to pay appropriate excise duty. There is no dispute on payment of duty on the re-issue of the goods on which credit was taken, therefore in terms of Rule 16, respondent is entitle for the Credit - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Availing Cenvat credit on finished goods.
2. Interpretation of Rule 2(k) of Cenvat Credit Rules, 2004.
3. Appeal against Order-in-Original.
4. Applicability of Rule 16 of Central Excise Rules, 2002.

Analysis:
1. The case revolved around the Respondent availing Cenvat credit on their final products, which were considered finished goods, not inputs. The department contended that Rule 2(k) of Cenvat Credit Rules, 2004 defines inputs as goods used in or in relation to the manufacture of the final product, which did not include the finished goods for which credit was claimed. Consequently, the adjudicating authority denied the credit, leading to an appeal by the assessee against the Order-in-Original.

2. The Ld. Addl. Commissioner representing the Revenue argued that Cenvat credit could only be allowed on inputs as per Rule 2(k) of Cenvat Credit Rules, 2004, highlighting the absence of provisions permitting credit on finished goods. Therefore, the adjudicating authority's decision to disallow credit on finished goods was deemed appropriate.

3. In response, the counsel for the respondent contended that the finished goods were subjected to necessary processes post-receipt, effectively transforming them into inputs eligible for credit. This argument was based on the premise that the re-entry of finished goods warranted the credit allowance.

4. The judgment critically analyzed the provisions of Rule 16 of Central Excise Rules, 2002, which allowed for the re-issuance of goods that had already incurred duty payment. The rule stipulated that Cenvat credit on finished goods could be availed provided the appropriate excise duty was paid upon re-issuance. As the respondent had fulfilled this requirement, the Tribunal upheld the appeal, dismissing the Revenue's claim. The decision underscored the special provision of Rule 16 enabling credit on finished goods under specific conditions, ultimately supporting the respondent's entitlement to the credit.

In conclusion, the Tribunal's ruling emphasized the application of Rule 16 in permitting Cenvat credit on finished goods, subject to the condition of duty payment upon re-issuance. This judgment clarified the distinction between inputs and finished goods in the context of availing Cenvat credit, highlighting the legal provisions governing such claims.