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2019 (11) TMI 481 - AT - Central ExciseCENVAT credit - Process amounting to manufacture or not - appellant had undertaken certain process of packing, repacking, labeling, relabeling etc. on this product and discharged duty on the same on clearance of the goods from the factory - whether the appellant is entitled to cenvat credit of duty paid on raw materials which were processed and resulted into finished product and cleared on payment of duty? - HELD THAT - The issue is no more res integra being covered by the judgment of the Hon ble Bombay High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES 2012 (7) TMI 141 - BOMBAY 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 docs not amount to manufacture. Appeal allowed - decided in favor of appellant
Issues:
- Entitlement to cenvat credit of duty paid on raw materials processed into finished products - Allegation of non-manufacture under Section 2(f) of the Central Excise Act, 1944 - Applicability of Section 11D for recovery of duty collected from customers Analysis: Issue 1: Entitlement to Cenvat Credit The appellant, engaged in manufacturing excisable goods, availed cenvat credit on indigenous raw materials under Chapter 32 and 39 of the Central Excise Tariff Act, 1985. They conducted processes like packing, repacking, labeling, and relabeling before clearing goods from the factory. The dispute arose when the Revenue alleged that these processes did not constitute "manufacture" as per Section 2(f) of the Central Excise Act, 1944, questioning the appellant's entitlement to cenvat credit. The appellant contended that they had informed the department about the processes undertaken and cited judgments from the Hon'ble High Courts and Tribunal supporting their position. Notably, the Hon'ble Bombay High Court's ruling in a similar case emphasized that once duty on final products is accepted by the department, cenvat credit need not be reversed even if the activity does not amount to manufacture. This principle was upheld by the Tribunal in various cases, including the one involving the appellant. Issue 2: Allegation of Non-Manufacture The central issue for determination was whether the appellant could claim cenvat credit on duty paid for raw materials processed into finished products. The Revenue argued that since the processes undertaken did not qualify as "manufacture" under the law, the appellant was not obligated to discharge duty and hence not entitled to avail credit on the inputs. However, the Tribunal, relying on the precedent set by the Hon'ble Bombay High Court, concluded that the appellant's actions were in line with legal provisions and previous judgments. The Tribunal found no merit in the Revenue's contention and set aside the impugned order, allowing the appeal with consequential relief as per law. Issue 3: Applicability of Section 11D Additionally, the Revenue sought to recover duty collected from customers under Section 11D of the Central Excise Act, 1944. The appellant argued that since the duty collected had been deposited with the government, Section 11D was not applicable. Citing judgments from various High Courts and the Tribunal, the appellant contended that the demand under Section 11D was legally untenable. The Tribunal agreed with the appellant's position, further strengthening the appellant's case and leading to the allowance of the appeal with consequential relief. In conclusion, the Tribunal's judgment favored the appellant, emphasizing their entitlement to cenvat credit on processed raw materials and dismissing the Revenue's allegations of non-manufacture and the applicability of Section 11D for duty recovery. The decision was based on established legal principles, precedents, and interpretations of relevant provisions, ensuring a fair and just outcome in the matter.
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