2024 (6) TMI 1176 - AT - Central Excise

CENVAT Credit on inputs - Process amounting to manufacture or not - embossing the logo of M/s. Hyundai on caseskin which was obtained by cutting the coil - HELD THAT - When the final product is stated as dutiable and duty is accordingly paid and collected by the revenue by treating the activity as manufacturing activity, the CENVAT credit is always available and hence, there is no question of denial or reversal of the same in the case on hand. Moreover, it is not disputed by the revenue that the appellant had paid duty, but they only are denying the CENVAT credit, which is not permissible in view of the ratio laid down by the High courts in THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES 2012 (7) TMI 141 - BOMBAY HIGH COURT . The denial as made in the impounded order is contrary to the settled position of law, which therefore requires to be set aside - Appeal allowed. Levy of penalty under Rule 15A of the CENVAT Credit Rules, 2004 - HELD THAT - The penalty is fastened based only on statement, without there being any independent evidence in support - the impugned order set aside. Appeal allowed.

Summary

Issues:
1. Whether the taxpayer's activity amounted to the process of manufacturing and if the CENVAT credit was correctly availed on the inputs.
2. Whether the penalty under Rule 15A of the CENVAT Credit Rules, 2004 was justified.

Analysis:

Issue 1:
The case involved the taxpayer embossing the logo of a company on caseskin obtained by cutting the coil. The Revenue contended that this did not amount to 'manufacture' as per a Supreme Court decision. The Revenue issued a Show Cause Notice alleging wrongful CENVAT credit availed by the taxpayer. The original authority confirmed the demands, leading to the appeal. The main issue was whether the taxpayer's activity constituted manufacturing and if the CENVAT credit was rightfully availed. The appellant argued that since duty was paid on the finished products, the credit on inputs should not be denied. The appellant cited judgments from various High Courts to support their position. The Tribunal noted that when duty is paid and collected by treating an activity as manufacturing, CENVAT credit should be available. The Tribunal found the denial of credit contrary to established law and set it aside, allowing the appeal.

Issue 2:
Regarding the penalty under Rule 15A of the CENVAT Credit Rules, the Tribunal found it was based solely on the taxpayer's statement without independent evidence. Since the impugned order against the main appellant was set aside, the findings applied to this appellant as well. Consequently, the Tribunal set aside the impugned order concerning the penalty and allowed the appeal. Both appeals were ultimately allowed by the Tribunal.

This detailed analysis of the judgment highlights the key arguments, legal principles, and the Tribunal's decision on each issue involved in the case.