2005 (3) TMI 341 - AT - Central Excise

Summary

Issues involved:
The issues involved in this judgment are the availing of Cenvat credit on inputs where no process of manufacture has taken place, specifically in relation to the drawing of wires from wire rods, and the entitlement to Modvat credit during the period in question.

Issue 1 - Availing of Cenvat credit on inputs without process of manufacture:
The appellant, M/s. Stumpp Scheule and Somappa Ltd., availed Cenvat credit on wires of Non-Alloy Steel and Alloy Steel for the manufacture of used Metallic Springs. The Revenue alleged that the appellant wrongly availed the credit as drawing of wires did not amount to a process of manufacture. The Tribunal referred to various judgments, including those by the Apex Court, and held that the availing of Cenvat credit on duty paid wires for non-manufacturing processes is not as per law.

Issue 2 - Entitlement to Modvat credit during the period in question:
In the case of M/s. SKF India Ltd., the appellants were manufacturing Ball Bearings, Roller Assembly, etc., and had taken credit of CE duty paid on wires received from wire drawing units. The department initiated proceedings to deny the Modvat credit on the same grounds as in the previous case. The Tribunal considered the arguments presented by both parties and referred to a judgment by the Delhi Bench of CESTAT, which held that the utilization of credit for inputs where no process of manufacture had taken place is permissible under Rule 57AB(1C) of the Act. The Tribunal concluded that there is no illegality in utilizing Modvat credit for the final product manufacture despite the non-manufacturing process of drawing wires.

This judgment clarifies the legality of availing Cenvat credit on inputs where no process of manufacture has taken place and affirms the entitlement to Modvat credit during the period in question based on relevant legal precedents and provisions.