2023 (1) TMI 877 - AT - Central Excise

Irregular availment of CENVAT Credit - Inputs (steel) can be treated as any input used for the manufacture of their finished goods i.e. MS Ingot or not - demand of CENVAT Credit alongwith penalty - HELD THAT - The manufacturer has taken entire credit in respect of inputs used in or in relation to the manufacture of the final products. It is seen that the suppliers are registered Central Excise dealers. The invoices under which the consignment was received by the Appellant is not in dispute. The said invoices clearly indicate duty-paid character of the said goods. It is also undisputed that the said inputs were received in the factory of the Appellants and consumed therein. It is the case of the Revenue that inputs being of prime quality the Appellants could not have used the same for melting. There is no restriction in the CENVAT Credit Rules that the Appellants should not use the prime quality materials for the manufacture of final products. As long as there is no dispute regarding the receipt and consumption of the inputs, dutypaid character thereof, the benefit of the CENVAT Credit cannot be denied to the Appellant. The facts of the present case are squarely covered by the decision of the Tribunal in the case of GUPTA METAL INDUSTRIES VERSUS COMMISSIONER OF CENTRAL EXCISE, DELHI 2004 (9) TMI 218 - CESTAT, NEW DELHI and BHAGWATI STEEL CAST LTD. VERSUS COMMISSIONER OF CENTRAL EXCISE, NASIK 2007 (10) TMI 57 - CESTAT, MUMBAI where it was held that Credit cannot be denied as there is no restriction in Cenvat Rules to use prime quality material in manufacture of final product - In the present case there is no dispute as regards the payment made by the Appellant to the supplier and therefore the benefit of CENVAT Credit cannot be denied. Appeal allowed.

Summary

Issues:
Irregular availment of CENVAT Credit for steel items used in manufacturing MS Ingot.

Analysis:
The case involved the Appellant, engaged in manufacturing non-alloy ingot and industrial oxygen gas, facing a Show Cause Notice alleging irregular availment of CENVAT Credit for steel items used in manufacturing MS Ingot. The Department contended that the steel items, specifically TMT Bars and Tore Steel, were of higher value and not suitable inputs for manufacturing the lower-valued MS Ingot. The Adjudicating authority upheld the demand for CENVAT Credit and imposed a penalty, which was affirmed by the Ld. Commissioner(Appeals), leading to the appeal before the Tribunal.

The Ld. Advocate for the Appellant argued that the Ld. Commissioner(Appeals) passed the order ex parte without a fair hearing, violating natural justice principles. He contended that the steel items were purchased for use as melting scrap in manufacturing MS Ingot, thus qualifying as inputs eligible for CENVAT Credit. The Advocate emphasized that the suppliers were registered dealers, invoices indicated duty-paid goods, and there was no dispute regarding receipt and consumption of the inputs. He cited relevant case laws to support the argument that the quality of the inputs did not preclude their use in manufacturing processes.

The Ld. Authorized Representative for the Department defended the impugned orders, asserting the lack of merit in the Appellant's appeal. After hearing both sides and examining the records, the Tribunal found that the Appellant had availed credit for inputs used in manufacturing final products, with no dispute over receipt, consumption, or dutypaid nature of the inputs. The Tribunal ruled that using prime quality materials for manufacturing final products was not prohibited by CENVAT Credit Rules. Citing precedents, the Tribunal concluded that the Appellant was entitled to CENVAT Credit, overturning the impugned orders and allowing the Appellant's appeal with consequential relief.

In summary, the Tribunal set aside the demand for CENVAT Credit, emphasizing the Appellant's entitlement to credit for using steel items, such as TMT Bars and Tore Steel, in manufacturing MS Ingot, based on the dutypaid nature of the inputs and absence of disputes regarding their receipt and consumption, in line with relevant case laws and CENVAT Credit Rules.