2013 (2) TMI 254 - AT - Central Excise

CENVAT credit on inputs used in a process considered as manufacture - Held that - The respondent had paid duty on their finished products. Naturally, they collected this duty from their customers. The department is asking the party to remit such collections also to the Government under Section 11D of the Central Excise Act. Both the lower authorities eminently negatived this view of the department by holding that Section 11D of the Act applied only to a person who had collected duty and not paid to the credit of the Central Government. Indisputably, the respondent paid duty on their finished goods and hence there is no question of a second payment of the same duty to the Central Government under Section 11D. It is unfortunate that such concurrent view of the original authority and the appellate authority on the point was sought to be challenged by the department. See Ashok Enterprises Vs. CCE, Chennai 2007 (11) TMI 67 - CESTAT, CHENNAI - in favour of assessee.

Summary

Issues involved:
1. Whether CENVAT credit on inputs used in a manufacturing process should be denied if the process is not considered as manufacture.
2. Whether the duty collected by the respondent on finished products should be remitted to the Government under Section 11D of the Central Excise Act.

Detailed Analysis:

Issue 1:
The main issue in this case revolved around the denial of CENVAT credit on inputs used in a process that was not considered as manufacture by the department. The respondent had paid duty on the final products, and the department sought to disallow the CENVAT credit based on the argument that the process did not amount to manufacture. However, both the original authority and the appellate authority ruled in favor of the respondent, citing a line of decisions supporting the view that CENVAT credit cannot be denied in such cases. The judge found no sustainable ground to overturn the concurrent findings of the lower authorities. The judge noted that the respondent had indeed paid duty on the finished products, and based on the precedent set by previous cases, the CENVAT credit could not be disallowed solely on the grounds that the process did not amount to manufacture.

Issue 2:
Another issue raised in the case was whether the duty collected by the respondent on the finished products should be remitted to the Government under Section 11D of the Central Excise Act. The department contended that the duty collected should also be paid to the Government under Section 11D. However, both the lower authorities rejected this argument, emphasizing that Section 11D applies only to individuals who have collected duty but not paid it to the Central Government. Since the respondent had already paid duty on the finished goods, there was no requirement for a second payment to the Government under Section 11D. The judge criticized the department for challenging the concurrent view of the original and appellate authorities on this matter, ultimately dismissing the appeal.

In conclusion, the judgment upheld the decisions of the lower authorities in favor of the respondent regarding the allowance of CENVAT credit on inputs used in a manufacturing process and the non-applicability of Section 11D for remittance of duty already paid on finished products to the Government.