2024 (5) TMI 991 - AT - Central Excise

CENVAT credit - process amounting to manufacture or not - process of drawing from bars and rods - HELD THAT - There is no provision in the CENVAT Credit Rules to deny credit at the end of the manufacturer who uses the inputs on which duty has been paid though under mistaken notion of law. The appellants having procured the inputs on payment of duty are entitled to avail CENVAT credit on the same. Credit allowed - The appeal is allowed.

Summary

Issues involved: Whether the process of drawing from bars and rods amounts to manufacture for availing CENVAT credit.

Summary:
The appellants, engaged in manufacturing steel cubes, procured bright steel bars as inputs and availed CENVAT credit. The Department contended that the process of drawing from bars and rods does not constitute manufacture, leading to denial of CENVAT credit. Multiple show cause notices were issued, culminating in confirmation of the denial by the original authority and Commissioner (Appeals).

Appellant's Argument:
The appellant's counsel argued that denial of CENVAT credit solely based on the supplier's process not amounting to manufacture is unjust. Referring to a CBEC Circular and legal precedents, it was emphasized that duty payment on inputs should entitle them to avail CENVAT credit. Additionally, a decision by the Commissioner (Appeals) in favor of similar manufacturers was cited as establishing the issue's finality in the appellant's favor.

Department's Response:
The Authorized Representative for the Department reiterated the findings of the impugned order, supporting the denial of CENVAT credit.

Tribunal's Decision:
After considering both sides and reviewing the case records, the Tribunal found no provision in the CENVAT Credit Rules to deny credit to manufacturers who have paid duty on inputs, even if under a mistaken legal notion. Citing precedents, including the case of Bhambra Fabricators, the Tribunal held that duty payment on inputs entitles manufacturers to avail CENVAT credit, irrespective of the final product's excisability. The Tribunal emphasized that if duty has been paid on inputs, credit cannot be denied, regardless of whether the input resulted from a manufacturing process. Consequently, the appeal was allowed, affirming the appellants' right to avail CENVAT credit on the inputs procured.

Operative part of the order: The appeal was allowed, as pronounced in the open court.