2015 (10) TMI 1974 - AT - Central Excise

Denial of CENVAT Credit - Manufacture - Held that - when the CENVAT credit availed on the inputs stand utilized for payment of duty on the final product, there would be no requirement of reversal of the said credit even if the activity undertaken by the assessee does not amount to manufacture. By following the decision 2014 (9) TMI 974 - CESTAT NEW DELHI , we set aside the impugned order - Decided in favour of assessee.

Summary

Issues:
1. Whether the activity of slitting and cutting HT/CR coils into HR/CR strips amounts to manufacture for CENVAT credit.
2. Obligation to reverse CENVAT credit when the credit is utilized for payment of duty on the final product.

Issue 1:
The Revenue initiated proceedings against the appellant for denial of CENVAT credit, arguing that the activity of slitting and cutting coils does not amount to manufacture. The lower authorities confirmed demands and imposed penalties. The question was whether the activity constitutes manufacture, considering the utilization of CENVAT credit for duty payment. The Tribunal referred to precedents and the majority order in Asian Colour Coated Ispat Ltd. Vs CCE, holding that if the credit is used for duty payment on the final product, there is no need to reverse the credit, even if the activity does not amount to manufacture. Following this decision, the impugned order was set aside, and the appeal was allowed in favor of the appellant.

Issue 2:
The primary issue was whether the appellant had an obligation to reverse the CENVAT credit despite utilizing it for excise duty payment on the final product. The Tribunal's decision clarified that as long as the credit availed on inputs is used for duty payment on the final product, there is no requirement to reverse the credit, regardless of whether the activity undertaken qualifies as manufacture. This interpretation aligned with previous decisions and provided consequential relief to the appellant by setting aside the impugned order and allowing the appeal.