2014 (3) TMI 485 - AT - Central Excise

Availment of CENVAT Credit - Cenvat credit on CRGO Coils, under Rule 14 of the Cenvat Credit Rules, 2004 along with charging of interest under Rule 14 of the Cenvat Credit Rules, 2004 - Activity of slitting of these CRGO coils was done at their factory which according to the Revenue, does not amount to manufacture - Held that - admissibility of Cenvat credit on slitting of CRGO coils cleared is no more res integra and has been decided by the Mumbai Bench of Tribunal in the case of Ajinkya Enterprises vs. Commissioner of Central Excise., Pune-III (2013 (6) TMI 610 - CESTAT MUMBAI) which has been upheld by the Hon ble High Court of Mumbai. Secondly, it is also observed that the duty paid by the appellant has been accepted by the department and nothing has been brought to out notice that the appellant was asked by the Revenue at any stage for not paying Central Excise duty when process did not amount to manufacture. In this regard, appellant has correctly placed reliance on the judgment of the Tribunal in the case of Markwell Paper Plast Pvt. Ltd vs. Commissioner of Cus. & C.Ex., Noida (2012 (7) TMI 290 - CESTAT, NEW DELHI) - it is held that the Cenvat credit was correctly availed by the appellant - Decided in favour of assessee.

Summary

Issues:
- Admissibility of Cenvat credit on CRGO Coils
- Whether slitting of CRGO coils amounts to manufacture
- Applicability of Cenvat Credit Rules, 2004
- Acceptance of duty paid by the department
- Interpretation of relevant case laws

Analysis:

The appeal was filed against an Order confirming a demand for wrongly taken Cenvat credit on CRGO Coils, along with interest and penalty. The main issue revolved around the admissibility of Cenvat credit on these coils due to the activity of slitting conducted at the factory. The Revenue contended that this activity did not amount to manufacture, thus Cenvat credit was not permissible.

The appellant relied on judgments from CESTAT Mumbai and CESTAT New Delhi to support their case. They argued that if goods are cleared on payment of duty accepted by the Revenue, even if the process does not amount to manufacture, Cenvat credit cannot be denied. On the other hand, the Revenue maintained that if a process does not constitute manufacture, Cenvat credit based on duty paid on inputs is not admissible under the Cenvat Credit Rules, 2004.

Upon hearing both sides, the Tribunal observed that the issue of Cenvat credit on slitting of CRGO coils had been previously settled by the Mumbai Bench of Tribunal and upheld by the High Court of Mumbai. Additionally, it was noted that the duty paid by the appellant had been accepted by the department without any objection raised regarding the non-payment of Central Excise duty for non-manufacturing processes.

Referring to the case law, the Tribunal emphasized that the department's acceptance of excise duty on the final product without protest precluded them from denying Cenvat credit on inputs used for manufacturing. Such denial would contradict the purpose of the Cenvat credit scheme, designed to prevent double taxation and protect the assessee from undue burdens. Consequently, the Tribunal held that the appellant had correctly availed Cenvat credit, leading to the allowance of the appeal.

In conclusion, the judgment favored the appellant, emphasizing the importance of adherence to established legal principles and the equitable application of tax laws to prevent unjust outcomes.