2013 (11) TMI 1293 - AT - Central Excise

Process amounts to Manufacture or not - Demand under section 11D - Waiver of Pre-deposit - Revenue was of the view that the process undertaken in respect of pipes & tubes is not manufacture and they are not entitled for Cenvat Credit of the inputs used Held that - The appellant have paid duty on final products by treating their process as manufacture and it is this duty which they recovered from the customers, it cannot be said that the amount recovered by the appellant from the customers as duty was not paid to the Government - Prima facie, the demand under section 11D is not sustainable and as such on this point the appellant have strong prima facie case in their favour. Cenvat Credit on inputs used in the processes which do not amounts to manufacture - on the finished products the appellant have paid the duty - Even if the Department s plea that processes undertaken by the appellant do not amount to manufacture, is accepted, this would have to be treated as a case of clearance of Cenvat Credit availed inputs as such which is permitted in the Cenvat Credit Rules - the appellant on these clearances have paid duty which is not less than the Cenvat Credit, availed - Prima facie, the Cenvat Credit demand would not be sustainable - the requirement of pre-deposit of Cenvat Credit demand and the amount demanded u/s 11D, interest thereon and penalty waived till the disposal Stay granted.

Summary

Issues:
1. Cenvat Credit eligibility for inputs used in various processes.
2. Recovery of duty from customers under section 11D for metal pipes and tubes.

Analysis:

Issue 1: Cenvat Credit eligibility for inputs used in various processes
The appellant undertook processes on metal pipes and tubes, claiming the final products as Curtain Poles and Accessories. The Department contended that the processes did not amount to manufacture, challenging the Cenvat Credit availed by the appellant. A Show Cause Notice was issued for recovery of allegedly wrongly taken Cenvat Credit. The Assistant Commissioner confirmed the demand, imposing a penalty. The Commissioner (Appeals) upheld this decision. The appellant argued that the processes indeed amounted to manufacture and cited relevant case laws supporting their claim. The Tribunal noted that even if the processes did not constitute manufacture, the appellant had paid duty on the finished products, rendering the Cenvat Credit demand unsustainable. Consequently, the Tribunal found a strong prima facie case in favor of the appellant and waived the pre-deposit requirement for hearing the appeal.

Issue 2: Recovery of duty from customers under section 11D for metal pipes and tubes
The Department asserted that since no duty was payable on metal pipes and tubes after the processes, the duty collected from customers was recoverable under section 11D. The Assistant Commissioner confirmed a demand against the appellant, which was upheld by the Commissioner (Appeals). The appellant contended that the duty collected was paid to the Government and thus not recoverable under section 11D. The Tribunal agreed with the appellant, stating that the duty collected was indeed paid to the Government on the final products. Therefore, the demand under section 11D was deemed unsustainable, leading to the Tribunal waiving the pre-deposit requirement and staying the recovery of the demanded amount, interest, and penalty for hearing the appeal.