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2015 (9) TMI 873 - AT - Central ExciseCapital goods - final product has become not liable to duty after availing the credit - Held that - At the time of procurement of capital goods, the appellant was clearing their final product on payment of duty on the understanding that their final product is dutiable and activity undertaken by the appellant amounts to manufacture. Same understanding was of the department. The only problem arose after the decision of the Hon ble Apex Court in the case of Aman Marble Industries (2003 (9) TMI 81 - SUPREME COURT OF INDIA) when Revenue has accepted the duty demand on the final product, the duty paid on final product shall amount to reversal of CENVAT Credit on capital goods. Moreover, when the final product has become not liable to duty in this circumstances whatever CENVAT Credit remain in their CENVAT Credit account shall not be any use of the appellant. Therefore, we hold that at the time of procurement of capital goods, the appellant has taken CENVAT Credit correctly. In these circumstances, impugned order is set aside - Decided in favour of assessee.
Issues:
1. Denial of CENVAT Credit on capital goods procured by the appellant. 2. Interpretation of the activity of cutting, dressing, and polishing of granite and marbles as manufacture. 3. Applicability of Rule 6(4) of CENVAT Credit Rules, 2004. 4. Impact of the judgment in the case of Aman Marble Industries on CENVAT Credit. Analysis: 1. The appellant appealed against the order denying CENVAT Credit on capital goods procured during the period of 2002 to 2003 for cutting, dressing, and polishing granite and marbles. The issue arose after a Supreme Court judgment in the case of Aman Marbles Industries clarified that such activities do not amount to manufacture. The Revenue sought to deny the credit, arguing that the final product was exempted, hence not excisable, and thus, CENVAT Credit on capital goods should be disallowed. 2. The appellant contended that at the time of availing the CENVAT Credit, both the Revenue and the appellant believed the activity constituted manufacture, as the final product was cleared on payment of duty. They relied on the judgment in the case of Aman Marble Industries and another case to support their claim that the activity indeed amounts to manufacture, justifying the CENVAT Credit taken on capital goods. 3. The appellant's argument was supported by the fact that the understanding at the time of procurement of capital goods was that the final product was dutiable and the activity was considered as manufacture by both parties. The issue arose post the Supreme Court judgment, where the duty paid on the final product was accepted, leading to the reversal of CENVAT Credit on capital goods. However, since the final product became duty-exempt, the remaining CENVAT Credit in the account was rendered useless. Therefore, the Tribunal held that the appellant correctly availed the CENVAT Credit on capital goods. 4. After hearing both parties and considering the submissions, the Tribunal set aside the impugned order, allowing the appeal with any consequential relief. The judgment emphasized the importance of the understanding at the time of procurement regarding the dutiability of the final product and the activity being classified as manufacture to determine the eligibility of CENVAT Credit on capital goods.
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