2015 (10) TMI 904 - AT - Central Excise

Disallowance of Cenvat credit - Bright bars - Manufacturing activity - Held that - The credit on Bright bars used by the appellant for the manufacture of finished goods, is sought to be denied on the ground that Bright bars are not a commodity subject to excise duty as no process of manufacture is involved in the transformation of round bars into Bright bars. The short question involved is whether the appellants are entitled to credit on the duty paid on Bright bars used as inputs. According to Department the manufacturer who supplied the bright bars was not liable to pay duty on these items as no process of manufacture was involved and therefore the appellant cannot avail credit on these items. The payment of duty on bright bars by the appellant is not disputed. So also there is no dispute that bright bars where used by the appellant to manufacture their final product. Again there is no case that the inputs supplied were not covered by valid document prescribed under the Cenvat Credit Rules, for availing credit. The benefit of credit is sought to be denied on the ground that on the end of the supplier these goods were not excisable goods. - If the supplier who supplied the goods is allowed credit even though the finished product is not an excisable commodity I cannot find any reason to deny the credit to the appellants who have received the goods by paying the duty. In CCE, Hyderabad vs. Deepthi Formulations Ltd 2013 (3) TMI 547 - CESTAT BANGALORE the Tribunal has taken the view that when the input is received in the factory and used in or in relation to manufacture of final product and payment of duty is evidenced by the invoices the credit cannot be denied. - Decided in favour of assessee.

Summary

Issues:
Challenge to disallowance of Cenvat credit on bright bars used as inputs for manufacturing motor vehicle parts.

Analysis:
The appellant challenged the disallowance of Cenvat credit on bright bars used as inputs for manufacturing motor vehicle parts. The issue revolved around whether the appellants were entitled to credit on the duty paid on bright bars used as inputs. The Department argued that no process of manufacture was involved in transforming round bars into bright bars, making them non-excisable. However, the appellant had paid duty on the bright bars and used them to manufacture final products. The Department's stance was based on the Supreme Court's judgment in a previous case. Interestingly, a trade notice clarified conflicting views on whether the process of making bright bars amounted to manufacture. The Commissioner (Appeals) noted the contentious nature of the issue, leading to protective demands being issued. The delayed adjudication highlighted the Department's confusion regarding the collection of excise duty on bright bars.

The appellant's counsel cited previous tribunal decisions where credit was allowed on inputs even if the final product was not excisable. The counsel argued that as long as duty was paid on the inputs and the final product, credit should not be denied. Another tribunal case emphasized that the payment of duty on inputs, regardless of whether they underwent a manufacturing process, was crucial for availing credit. These precedents supported the appellant's claim for Cenvat credit on the bright bars used in manufacturing.

In light of the arguments and precedents cited, the tribunal set aside the impugned order and allowed the appeal, granting consequential reliefs if any. The decision highlighted the importance of duty payment on inputs and final products for claiming Cenvat credit, irrespective of the manufacturing process involved.