2018 (5) TMI 871 - AT - Central Excise

CENVAT credit - inputs - closure of factory - It is the allegation of the Department that during the period from April, 2012 to November, 2013 ; April, 2014 to February, 2015, the factory was closed, but the appellant has claimed the cenvat credit on the inputs, which was denied by the Department. Held that - In the instant case, during the period under consideration, the manufacturing process was continuing with the help of job worker as well as in the Specialized Tankers . The raw material, after the payment of duty, was supplied to the job worker. The raw material supplied to the job worker, M/s HCIL or other reputed companies, were received back by them in Specialized Tanker . When the excise duty was paid on the final product, then, cenvat credit is permissible - the essential ingredients for availment of cenvat credit are the discharge of duty liability by the appellants. Appeal allowed - decided in favor of appellant.

Summary

Issues: Appeal against Order-in-Original denying Cenvat credit on inputs, alleged closure of factory, imposition of penalties, retracted statements, process of manufacture of Coal Tar Pitch, origin of goods, use of "Specialized Tankers," applicability of Central Excise Act, 1944, and Cenvat Credit Rules, 2004.

Analysis:

1. Closure of Factory and Denial of Cenvat Credit:
- The appellant, engaged in Coal Tar Pitch manufacturing, faced allegations of falsely claiming Cenvat credit during periods of factory closure.
- Statements of company officers were retracted, citing lack of opportunity for cross-examination as per Central Excise Act, 1944.
- The Revenue argued that the factory was closed, no raw materials were received, and no production occurred, justifying the denial of credit.

2. Process of Manufacture and Use of "Specialized Tankers":
- The appellant contended that the thermal process in "Specialized Tankers" for achieving softening points qualifies as manufacturing under Central Excise Act, 1944.
- Legal counsel referenced relevant case laws supporting the inclusive definition of manufacture.
- The appellant's use of "Specialized Tankers" with specific features for the manufacturing process was highlighted.

3. Receipt of Inputs and Cenvat Credit Rules:
- The appellant received inputs in "Specialized Tankers" for completion of the manufacturing process, justifying the receipt within the expanded meaning of "factory."
- Compliance with Cenvat Credit Rules, 2004, was emphasized, including the job work arrangement with M/s HCIL and subsequent supply to M/s NALCO.

4. Judicial Review and Decision:
- After detailed hearings and examination of records, the Tribunal found in favor of the appellant.
- The Tribunal noted the lawful payment of duty on the final product, entitling the appellant to Cenvat credit on inputs.
- The impugned order denying credit was set aside, and the appeals filed by the appellants were allowed.

By considering the manufacturing process, compliance with legal provisions, and the specific circumstances of the case, the Tribunal ruled in favor of the appellant, allowing the appeals and setting aside the denial of Cenvat credit on inputs.