2017 (12) TMI 378 - AT - Central Excise

CENVAT credit - part of intermediate goods cleared outside (on payment of duty) - case of Revenue is that duty paid by the assessee on the intermediate by product is not their input therefore they were not entitle for the cenvat credit - Held that - The appellant have undisputedly paid the excise duty while clearing the said by product on which credit was availed. Once the excise duty paid on the removal of the said by product credit availed thereon cannot be disputed - As regard the payment of duty of byproduct while retaining goods in the factory no dispute was raised by the Revenue. Once the goods is retained in the factory on which excise duty was paid the same can be treated as input and Cenvat credit can be availed - credit cannot be denied - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Availability of Cenvat credit on intermediate goods used in manufacturing final products.
2. Dispute regarding excise duty payment on intermediate goods.
3. Applicability of Cenvat Credit Rules on the case.

Analysis:
1. The case involved the availability of Cenvat credit on intermediate goods used in the manufacturing process of final products. The appellant, engaged in manufacturing soaps and detergents, paid excise duty on intermediate by-products and availed Cenvat credit. The Revenue contended that these intermediate goods were final products and not eligible for Cenvat credit. The Tribunal noted that the appellant had paid excise duty on the intermediate goods, whether used captively or cleared to another unit, and reversed the credit upon removal. The Tribunal held that the intermediate goods were indeed inputs usable in manufacturing other final products, making them eligible for Cenvat credit. The demand for Cenvat credit was set aside on merit as there was no violation of the Cenvat Credit Rules.

2. The dispute also revolved around excise duty payment on intermediate goods. The appellant had paid excise duty on the by-products and cleared them to another unit within the same company. The Revenue argued that duty payment on these goods was not admissible. However, the Tribunal found that the duty paid on the removal of the by-products resulted in the reversal of the Cenvat credit availed, making any demand baseless. The Tribunal emphasized that once excise duty was paid on the removal of the goods, the credit availed could not be disputed. Therefore, the demand for Cenvat credit on intermediate goods was deemed unsustainable.

3. In analyzing the case, the Tribunal considered the applicability of the Cenvat Credit Rules. It was established that the appellant had paid excise duty on the intermediate goods, whether for captive use or external clearance, and reversed the credit upon removal. The Tribunal concluded that the demand for Cenvat credit was not justified as there was no violation of the Cenvat Credit Rules. Consequently, the appellant's appeal was allowed, and the Revenue's appeal, which focused on the time bar issue, was dismissed as it did not survive due to the lack of merit in the primary demand. The judgment was pronounced on 17/11/2017.