2017 (2) TMI 1162 - AT - Central Excise

CENVAT credit - denial on the ground that the activity of drawing of wire from thicker to thinner gauge does not amount to manufacture - Held that - the assessee is permitted to avail the Cenvat credit on the duty paid goods for carrying out remaking, refining, reconditioning or for any other reason and after any of the said process even if not amounting to manufacture when the goods is cleared then the duty has to be paid equal to Cenvat Credit availed on receipt of duty paid input - the respondents have taken credit on the duty paid on wire rodes and after the process of drawing they have paid duty determined on clearances on the transaction value - Cenvat Credit is legally admissible. Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Entitlement to Cenvat credit on wire rods for drawing activity not amounting to manufacture.
2. Admissibility of Cenvat credit for the period before and after the retrospective amendment.
3. Impact of exportation on the allowance of credit under Rule 16 of Central Excise Rules, 2000.

Analysis:
1. Entitlement to Cenvat Credit:
The case involved the appellant engaged in wire drawing activity, which the Revenue argued did not amount to manufacture based on a Supreme Court ruling. The Revenue denied Cenvat credit on inputs received for this activity. The Commissioner (Appeals) allowed the appeal, leading the Revenue to appeal. The Tribunal noted Rule 16 of Central Excise Rules, 2001, allowing credit for various processes, even if not amounting to manufacture. The Tribunal found that the appellant followed the rule by paying duty on clearances after processing, making the credit admissible.

2. Admissibility of Cenvat Credit Pre and Post Amendment:
The Revenue argued that the retrospective amendment only allowed credit for a specific period, excluding the appellant's credit availed before that. The appellant's counsel contended that as the processed goods were exported, credit should be allowed under Rule 16. The Tribunal found that even if Rule 16 did not cover the period before the amendment, the credit availed for export transactions was legally admissible, as the goods were either cleared with duty payment or under bond for export.

3. Impact of Exportation on Credit Allowance:
The appellant's counsel relied on various tribunal decisions to support the allowance of credit for export transactions. The Tribunal agreed that if the processed goods were cleared for export, the credit availed on inputs was admissible, as long as the goods were not cleared in the domestic market without duty payment. The Tribunal upheld the impugned order, dismissing the Revenue's appeal based on the legal admissibility of the Cenvat credit for the export transactions.

In conclusion, the Tribunal found no infirmity in the impugned order, upholding the appellant's entitlement to Cenvat credit for the wire drawing activity and export transactions, as per Rule 16 of Central Excise Rules, 2001. The Revenue's appeal was dismissed, and the judgment was pronounced on 02/02/2017.