2020 (4) TMI 377 - AT - Central Excise

CENVAT Credit - input - MS pipes (Black) - denial on the ground that the activity not amounting to manufacture - HELD THAT - The fact that although this MS pipe (Black) is not input for the appellant on which they have taken cenvat credit (without any process) has been cleared on payment of duty. Hon ble High Court in the case of THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES 2012 (7) TMI 141 - BOMBAY HIGH COURT has held that if the activity does not amount to manufacture and goods have been cleared on payment of duty, the same shall amount to reversal taken of cenvat credit on the said goods - In the present case, as the appellant has paid the duty which shall amount to reversal of cenvat credit demanded by the Revenue in the impugned matter. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Entitlement to avail cenvat credit on MS pipes (Black) by the appellant.

Analysis:
The appellant appealed against an order denying them the entitlement to avail cenvat credit on MS pipes (Black) as it was deemed that the activity related to these pipes did not amount to manufacturing. The appellant, engaged in manufacturing various items, procured duty paid MS pipes (Black) and availed cenvat credit on them, even though they were not considered inputs. The pipes were cleared without undergoing any processing but on payment of duty. Upon audit, it was discovered that the appellant had availed cenvat credit on these pipes, leading to a show cause notice being issued, resulting in the demand for reversal of cenvat credit, interest, and imposition of a penalty. The appellant contested this decision before the Tribunal.

During the hearing, it was established that the MS pipes (Black) were not considered inputs for the appellant, and they had availed cenvat credit without any processing, clearing them by paying duty. The Tribunal referred to a precedent set by the Hon'ble High Court, where it was determined that if an activity does not amount to manufacturing and goods are cleared after duty payment, it constitutes a reversal of cenvat credit on said goods. Consequently, the Tribunal concluded that since the duty was paid on the MS pipes (Black), it effectively amounted to the reversal of cenvat credit demanded by the Revenue in this case.

In light of the above analysis, the Tribunal found the impugned order unsustainable in the eyes of the law. Consequently, the Tribunal set aside the impugned order and allowed the appeal, providing for any consequential relief deemed necessary.

This judgment clarifies the criteria for availing cenvat credit, particularly in cases where the activity does not amount to manufacturing and goods are cleared after duty payment. The decision underscores the importance of complying with relevant regulations to avoid reversals of cenvat credit and associated penalties.