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2019 (11) TMI 1262 - AT - Central ExciseRecovery of CENVAT Credit - credit on sulphur lump - denial of credit on the ground that the process carried out by the Appellant on sulphur lump does not result into manufacture within the definition of manufacture as prescribed under Section 2(f) of Central Excise Act, 1944 - HELD THAT - Undisputedly the appellant had discharged appropriate Central Excise duty after undertaking the process of repacking, relabeling of the inputs on which credit has been availed by them. Thus, it is incorrect to allege that the appellants are not eligible to avail CENVAT Credit on inputs that has been utilized in the manufacture (repacking, relabeling etc.) of resultant product, on which appropriate excise duty was paid and accepted by the Revenue. The issue is no more res integra and covered by the judgment of 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:
- Denial of CENVAT credit on input materials used in manufacturing process - Allegation of activities not amounting to manufacture - Interpretation of Section 2(f) of Central Excise Act, 1944 - Applicability of principles of law laid down by the Hon'ble Bombay High Court Analysis: Issue 1: Denial of CENVAT credit on input materials The appeal was filed against the denial of CENVAT credit on input crude sulphur used in the manufacturing process. The Appellants procured crude sulphur, paid duty on it, and used it to manufacture other excisable products. The Revenue alleged that the process on sulphur lump did not amount to manufacturing as per Section 2(f) of the Central Excise Act, 1944. A Show Cause Notice was issued for recovery of CENVAT Credit availed on the lump. The Adjudicating Authority dropped proceedings under Section 11D of the Act. The Appellants contended that the process undertaken did result in manufacture, citing the payment of duty on the finished product, sulphur powder. Issue 2: Allegation of activities not amounting to manufacture The Revenue argued that the activities of repacking and relabeling the inputs did not constitute manufacturing, leading to the denial of CENVAT credit. However, the Appellants maintained that the process of repacking, relabeling, and other activities were integral to the manufacturing process, as duty was paid on the finished product. The Appellants relied on a judgment of the Hon'ble Bombay High Court to support their position. Issue 3: Interpretation of Section 2(f) of Central Excise Act, 1944 The Tribunal examined whether the activities carried out by the Appellants fell within the definition of manufacture under Section 2(f) of the Central Excise Act, 1944. It was noted that the Appellants had paid appropriate Central Excise duty on the repacking and relabeling process, indicating compliance with the legal requirements. The Tribunal considered the precedent set by the Hon'ble Bombay High Court in a similar case to determine the eligibility of the Appellants for CENVAT credit. Issue 4: Applicability of principles of law laid down by the Hon'ble Bombay High Court The Tribunal referenced a judgment of the Hon'ble Bombay High Court to support its decision. The High Court's ruling emphasized that once duty on final products had been accepted by the department, CENVAT credit availed need not be reversed even if the activity did not strictly amount to manufacture. The Tribunal followed this legal principle and set aside the impugned order, allowing the appeal in favor of the Appellants. In conclusion, the Tribunal found that the Appellants were eligible to avail CENVAT credit on the inputs used in the manufacturing process, including repacking and relabeling activities. The decision was based on the interpretation of relevant legal provisions and the application of established legal principles as laid down by the Hon'ble Bombay High Court.
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