2019 (4) TMI 1256 - AT - Central Excise

CENVAT Credit - raw material, Calcined Alumina, received from sister unit - denial of credit on the ground that such raw materials have not been purchased by the appellant s unit, but has been procured - Rule 7 (4) of the Cenvat Credit Rules, 2002 - HELD THAT - An identical dispute has been considered and decided by the Tribunal in EXIDE INDUSTRIES LTD. VERSUS COMMISSIONER OF C. EX., HALDIA 2008 (1) TMI 190 - CESTAT, KOLKATA in favour of the assessee. The Tribunal has taken the view that the cenvat credit will be admissible even in cases when the goods are procured. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Availment of cenvat credit on raw material procured from sister unit
- Interpretation of Rule 7(4) of Cenvat Credit Rules, 2002
- Dispute regarding payment of Central Excise duty on raw material
- Admissibility of cenvat credit on inputs "purchased by the manufacturer"

Analysis:

The case involves a dispute over the availment of cenvat credit on raw material, specifically Calcined Alumina, procured by the appellant from its sister unit during the period June 2002 to March 2003. The appellant, a Central Public Sector Undertaking engaged in manufacturing aluminum products, transferred the raw material from its sister unit to its main unit for production. The Department contended that cenvat credit cannot be allowed as the raw material was not "purchased" but "procured" by the appellant. The issue revolves around the interpretation of Rule 7(4) of the Cenvat Credit Rules, 2002, which allowed credit on inputs "purchased by the manufacturer."

The appellant argued that there was no justification to deny cenvat credit based on a technicality, especially since the word "Purchased" had been substituted with "Procured" by an amendment in 2003. The appellant cited previous case laws, including Exide Industries Ltd. and ITC Ltd., where similar issues were decided in favor of the appellant. The Revenue, represented by the ld.D.R., upheld the impugned order disallowing the cenvat credit.

After hearing both sides and examining the records, the Tribunal noted that there was no dispute regarding the payment of duty on the raw material or its use in manufacturing aluminum. The Tribunal referred to previous judgments, including Exide Industries Ltd., where it was held that cenvat credit would be admissible even for procured goods. The Tribunal emphasized that the substitution of "Procured" for "Purchased" in Rule 7(4) from March 2003 did not affect the admissibility of credit for the disputed period. Therefore, the Tribunal set aside the impugned order and allowed the appeal in favor of the appellant.