2019 (7) TMI 484 - AT - Central Excise

CENVAT credit - input credit - purchase of finished/semifinished AC pressure pipes, which they have cleared on payment of duty - HELD THAT - As per the law laid down by Hon'ble Bombay High Court in THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES 2012 (7) TMI 141 - BOMBAY HIGH COURT and by the Gujarat High Court in COMMISSIONER OF CENTRAL EXCISE VERSUS DELTA CORPORATION 2013 (2) TMI 31 - GUJARAT HIGH COURT where it was held that Once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity does not amount to manufacture. Credit need not be reversed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Whether the appellant, a manufacturer of AC pressure pipes and couplers, is required to reverse the input credit taken on the purchase of finished/semifinished AC pressure pipes cleared on payment of duty.

Analysis:
The appellant, registered for manufacturing AC pressure pipes and couplers, availed duty exemption under Notification No. 5/2006-CE for goods with specified materials. The appellant procured semifinished/finished AC pressure pipes from other manufacturers to meet supply orders exceeding their capacity. After quality testing, they cleared these pipes to customers on duty payment. During an audit, it was alleged that the appellant wrongly claimed concessional duty on these cleared goods. Revenue contended that the procurement and clearance of these pipes did not constitute manufacturing as per Central Excise Act's definition. Statements from the appellant's signatory and supplier companies were recorded to support this claim. The appellant was issued a show cause notice demanding Cenvat Credit repayment and imposing penalties.

The show cause notice was contested, and the demand was confirmed, including penalties and interest. The appellant appealed to the Commissioner (Appeals), who upheld the decision. The appellant then approached the Tribunal, arguing that their actions were revenue-neutral as they cleared goods at the same rate as they received them. They claimed that the processes of cutting, turning, simpering, and testing constituted manufacturing. Even if they cleared finished pipes, they acknowledged the need to reverse Cenvat Credit.

The Tribunal considered the arguments and cited judgments from the Bombay High Court, Gujarat High Court, and other cases supporting the appellant's position. Relying on these precedents, the Tribunal set aside the impugned order, allowing the appeal with consequential benefits.