2015 (10) TMI 1638 - AT - Central Excise

Denial of CENVAT Credit - whether the appellant, who is engaged in manufacture of copper coated MS wires, is eligible for Cenvat credit - Held that - In view of the decisions cited, the decisions were rendered taking a view that even when there is no manufacture, credit can be taken. The only difference is that in the case of the appellant, the goods were transferred to their own unit, whereas in other cases, input suppliers were there. In my opinion, appellants could have exercised and should have exercised proper assessment process in which case, there would have been no need to pay the duty again by the second unit after taking credit since there is no manufacture in the second unit. Even after the appellants were informed by the authorities, they went on taking the credit. Having regard to the facts and circumstances, in my opinion, the appellants are liable for imposition of penalty of ₹ 5,000/- that would meet the ends of justice. Accordingly the demand for Cenvat credit with interest is set aside and mandatory penalty is also set aside. - Decided in favour of assessee.

Summary

Issues:
Whether the appellant, engaged in manufacturing copper coated MS wires, is eligible for Cenvat credit.

Analysis:
The issue in the appeals before the Appellate Tribunal was the eligibility of the appellant, involved in the manufacture of copper coated MS wires, for Cenvat credit. The appellant had paid duty on the wires manufactured and transferred them to Unit-II, which then took credit for the duty paid, conducted packing activities, and cleared the goods after paying duty. The appellant argued that the amount of duty paid exceeded the credit taken due to additional packing costs, indicating that the entire Cenvat credit had effectively been reversed. The appellant relied on legal precedents, including the decision in the case of C.C.E. v. Delta Corporation, to support their claim for credit. On the other hand, the learned Additional Commissioner opposed the appellant's position, contending that the appellant had knowingly taken credit despite the ineligibility, justifying the initiated proceedings.

After hearing both parties and considering the submissions, the Member (T) found that the issue could be conclusively decided without further delay. The requirement for pre-deposit was waived, and the appeals were taken up for a final decision. The Member noted that while the appellant had cited additional legal decisions, none of them directly applied to a situation where the same appellant had two units. However, the decisions cited generally supported the view that credit could be taken even in cases without actual manufacturing. The Member highlighted that the appellant could have followed proper assessment procedures to avoid paying duty again at the second unit after taking credit, especially since there was no manufacturing at the second unit. Despite being informed by authorities, the appellant continued to take credit, leading the Member to conclude that a penalty of Rs. 5,000 would be appropriate in each case to serve the interests of justice. Consequently, the demand for Cenvat credit with interest was set aside, and the mandatory penalty was imposed at Rs. 5,000 in each case, with the appeals being disposed of accordingly.