2018 (8) TMI 238 - AT - Central Excise

CENVAT Credit - inputs - H.R. Coils, Zinc and LPG Gas - Department contended that process of galvanization carried out by the assesse does not amount to manufacture therefore, the Hot Dipped Galvanized Steel coils cleared by the appellants cannot be regarded as excisable goods and therefore, the CENVAT Credit availed on the same is not eligible. Held that - CBEC vide Circular No. 19/19/1994-CX dated 09.02.1994 has clarified that galvanization does not amount to manufacture within the meaning of Section 2(f) of Central Excise Act, 1944 - Tribunal has also held that galvanization does not amount to manufacture. Tribunal in the case of Faridabad Iron & Steel Traders Association 2003 (11) TMI 107 - HIGH COURT OF DELHI has held that merely because of change in tariff item, the goods do not become excisable goods - As the galvanization does not amount to manufacture, the inputs in the galvanization cannot be used in the manufacture of excisable goods; therefore, the credit of the same is not available to the appellants in terms of CENVAT Credit Rules, 2004. Credit not allowed - appeal dismissed - decided against appellant.

Summary

Issues: CENVAT Credit eligibility on goods cleared after galvanization process.

Analysis:
1. Background: The case involved M/s. United Galva Pvt. Ltd. availing CENVAT Credit on inputs used for the galvanization process of Hot Dipped Galvanized Steel coils. The Department contended that galvanization does not amount to manufacture, making the goods non-excisable.

2. Contentions of Appellants: The appellants argued that the process of galvanization amounts to manufacture as there is a change in the chapter heading and character of goods after galvanization. They also cited relevant case laws and Circulars supporting their claim for CENVAT Credit eligibility.

3. Department's Stand: The Department, through the Authorized Representative, supported the findings of the Order-in-Original and Order-in-Appeal, asserting that galvanization does not constitute manufacture as per CBEC Circular No. 19/19/1994-CX.

4. Tribunal's Decision: The Tribunal, after considering the arguments and precedents, upheld that galvanization does not amount to manufacture. They referred to various case laws and Circulars to support their decision, emphasizing that a mere change in tariff item post-galvanization does not render the goods excisable.

5. Precedents Considered: The Tribunal relied on case laws such as Silvasa Wooden Drums, CCE Raipur Vs. Sona Wires Pvt. Ltd., and Siddarth Tubes Ltd., along with the decision in Faridabad Iron & Steel Traders Association case, supported by the Supreme Court ruling. These cases reinforced the principle that galvanization does not transform goods into excisable products.

6. Conclusion: Ultimately, the Tribunal rejected the appeals, stating that as galvanization does not amount to manufacture, the appellants were not eligible for CENVAT Credit on inputs used in the galvanization process. They emphasized that the CBEC Circular No. 314/30/97-CX was not applicable in this case, affirming the lower authorities' orders.

In summary, the judgment clarified that galvanization does not qualify as manufacturing under the Central Excise Act, leading to the denial of CENVAT Credit eligibility for goods cleared post-galvanization. The decision was based on established legal principles, case laws, and Circulars, highlighting the importance of understanding the manufacturing process in excise matters.