2014 (2) TMI 721 - AT - Central Excise

Denial of CENVAT Credit - Cenvat Credit denied on the ground that the activity of cutting and slitting did not amount to manufacture - Commissioner dropped the demand holding that the activity of cutting and slitting amounts to manufacture and therefore the appellant is rightly eligible for the Cenvat Credit taken - Held that - In view of Notification NO. 24/2002-CE dated 19/04/2012, the respondent herein is not required to reverse the Cenvat Credit taken of the excise duty or CVD paid on the materials procured by them for undertaking the job-work on which they have discharged excise duty liability. The demand is also for the period up to 15/03/2012. Thus, the appellant has satisfied the conditions (a) & (b) specified in the said Notification. As regards the condition (c), the Ld. Counsel for the respondent submits that the appellant has not made any refund claim. Subject to verification of this claim by the department, the benefit of Notification No. 24/2012-CE is available to the appellant. Consequently, the question of demanding duty amounting to Rs. 1,54,33,170/- would not arise at all - Decided against Revenue.

Summary

Issues involved:
- Whether cutting and slitting of jumbo rolls of aluminium foil amounts to manufacture for excise duty purposes.
- Interpretation of Notification No. 24/2012-CE dated 19/04/2012 regarding Cenvat Credit reversal.

Analysis:
1. The case involves a dispute where the appellant, engaged in manufacturing HG Capsules, undertook cutting and slitting of jumbo rolls of aluminium foil, believing it to be manufacturing activity and availed Cenvat Credit. A show-cause notice was issued for reversal of Cenvat Credit, contending that cutting and slitting did not amount to manufacture.

2. The Commissioner, in the impugned order, held that cutting and slitting constitutes manufacture, allowing the Cenvat Credit. The Revenue appealed, citing a Supreme Court decision in the case of S.R. Tissue Pvt. Ltd., which held that similar activities did not amount to manufacture.

3. The Revenue also referenced Notification No. 24/2012-CE, which waived the need for Cenvat Credit reversal under certain conditions. The appellant claimed eligibility under this notification, stating they did not seek a refund of excise duty paid on the final product.

4. The Tribunal analyzed the situation, noting that the appellant satisfied conditions (a) and (b) of the notification up to 15/03/2012. Regarding condition (c), verification was required to confirm the absence of refund claims. The Tribunal concluded that if the claim was substantiated, the appellant would benefit from the notification, rendering the demand for duty baseless.

5. Consequently, the Tribunal found the Revenue's appeal lacking merit and potentially subject to dismissal pending verification of condition (c) by the Assistant Commissioner of Central Excise. The decision hinged on the application of Notification No. 24/2012-CE and the classification of cutting and slitting as manufacturing activity for excise duty purposes.

This detailed analysis encapsulates the legal nuances and factual considerations of the judgment, addressing each issue comprehensively while preserving the essential legal terminology and key points from the original text.