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2015 (12) TMI 254 - AT - Central ExciseCENVAT Credit - Captive consumption - whether the assessee have availed CENVAT credit correctly or otherwise when the activity undertaken by them on the inputs according to revenue does not amount to manufacture - Held that - During the period post 24.06.2010, assessee had cleared the products as manufactured products on payment of appropriate duty, which was more than the CENVAT credit availed by them on the inputs which were used. The ratio of the Hon ble High Court s judgement in the case of Ajinkya Enterprises (2012 (7) TMI 141 - BOMBAY HIGH COURT) would be applicable in the case in hand as in that case also the issue was regarding oiling and pickling, cutting and slitting of H.R./C.R. Coils is the same. - Tribunal in the case of R.B Steel Services (2015 (1) TMI 292 - CESTAT NEW DELHI) were also considering an identical issue in respect of process of conversion of black bars/rods into bright bars and availment of CENVAT credit on the inputs. The Tribunal after considering the issue and the case law, relied upon the judgement of the Hon ble High Court of Bombay in the case of Ajinkya Enterprises (supra) stated that the issue is no more res integra. - Impugned order is set aside - Decided in favour of assessee.
Issues Involved:
1. Whether the process of oiling and pickling of H.R. Coils amounts to manufacture. 2. Whether the assessee correctly availed CENVAT credit on inputs used in the process. 3. Whether the duty paid by the assessee on the final products was more than the CENVAT credit availed. 4. Applicability of CBEC Circular No. 927/17/2010-CX dated 24.06.2010. 5. Interpretation and binding nature of departmental circulars and judicial precedents. Issue-wise Detailed Analysis: 1. Whether the process of oiling and pickling of H.R. Coils amounts to manufacture: The adjudicating authority and the respondent argued that the process of oiling and pickling does not amount to manufacture as per Section 2(f) of the Central Excise Act, 1944. The respondent cited various judgments and CBEC Circular No. 927/17/2010-CX to support this claim. However, the assessee contended that the process of oiling and pickling is a manufacturing process, citing the definition of manufacture under Section 2(f) and the publication "Practical Metallurgy and Materials of Industry" by John E. Neely. The Tribunal, however, chose to resolve the case based on the duty paid versus CENVAT credit availed rather than delving into the manufacturing aspect. 2. Whether the assessee correctly availed CENVAT credit on inputs used in the process: The Tribunal noted that the assessee had been availing CENVAT credit on inputs and discharging appropriate duty on the final products since 1992. The assessee argued that the duty paid on the final products was more than the CENVAT credit availed, effectively reversing the credit. The Tribunal found this argument compelling and relied on the precedent set by the Hon'ble High Court of Bombay in Ajinkya Enterprises, which held that if the duty paid on the final product is more than the CENVAT credit availed, the credit cannot be disputed. 3. Whether the duty paid by the assessee on the final products was more than the CENVAT credit availed: The Tribunal confirmed that the duty paid by the assessee on the final products post 24.06.2010 was indeed more than the CENVAT credit availed on the inputs. This fact was undisputed and formed the basis for the Tribunal's decision to set aside the impugned orders. 4. Applicability of CBEC Circular No. 927/17/2010-CX dated 24.06.2010: The assessee argued that the CBEC Circular dated 24.06.2010, which stated that oiling and pickling do not amount to manufacture, was not binding on the Tribunal. The Tribunal agreed, noting that judicial precedents take precedence over administrative circulars. The Tribunal cited the judgment in Ajinkya Enterprises, which was accepted by the Revenue and not appealed further, thus making it a binding precedent. 5. Interpretation and binding nature of departmental circulars and judicial precedents: The Tribunal emphasized that judicial precedents, such as the judgments in Ajinkya Enterprises and Creative Enterprises, are binding and take precedence over departmental circulars. The Tribunal also referenced the Supreme Court's dismissal of the Revenue's SLP in Creative Enterprises, reinforcing the principle that once duty is paid, the availing of CENVAT credit cannot be questioned. Conclusion: The Tribunal concluded that the assessee had correctly availed CENVAT credit and paid more duty on the final products than the credit availed. The impugned orders were set aside, and the appeals of the assessee were allowed. The appeals of the Revenue were rejected. The Tribunal did not record findings on other submissions, considering them academic for this case.
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