2017 (11) TMI 1445 - AT - Central Excise

CENVAT credit - high chrome grinding media balls, which were procured for further process - Revenue held a view that the grinding media balls procured by the appellants were as such cleared by them after some process and the credit of duty paid on inputs is not eligible to them - Held that - the appellants cleared the final products on payment of central excise duty on a value added consideration which is much higher than the cenvat credit availed on the impugned inputs - Even if the process undertaken by the appellant is to be considered as not amounting to manufacture so at the time of clearance of the final products, the payment is much higher than the credit taken, the same will satisfy the legal provisions of reversal of credit on the inputs - appeal allowed - decided in favor of appellant.

Summary

Issues: Eligibility of appellant to avail credit on duty paid high chrome grinding media balls.

Analysis:
The appeal was made against the order of the Commissioner of Central Excise, Jaipur, regarding the eligibility of the appellant to avail credit on duty paid high chrome grinding media balls used in their manufacturing process. The Revenue contended that the grinding media balls procured by the appellant were cleared after some process and thus, the credit of duty paid on inputs was deemed ineligible. The Original Authority disallowed the credit availed on such grinding balls and imposed a penalty accordingly.

The appellant argued that they procured rejected grinding media balls, paid appropriate duty, used them in further processes, and cleared the final product as grinding media balls after paying duty. They provided a Chartered Engineer's certificate to support their claim. On the other hand, the Revenue claimed that the goods received by the appellant were finished goods themselves and did not qualify as inputs under the Cenvat Credit Rules, 2004.

After hearing both sides, it was established that the appellant procured duty paid grinding media balls, processed them by melting and re-making, and cleared the finished products after discharging the duty liability. The Tribunal noted that the Original Authority failed to consider the processes undertaken by the appellant and did not analyze whether the final products on which duty was paid were produced using the input credit in question. Referring to relevant legal precedents, the Tribunal emphasized that the appellant cleared final products after paying central excise duty on a value-added consideration higher than the cenvat credit availed on the inputs. Even if the process undertaken did not amount to manufacture, the payment made during the clearance of final products exceeded the credit taken, satisfying the legal provisions for reversal of credit on inputs. Consequently, the impugned order disallowing the credit was set aside, and the appeal was allowed.