2019 (5) TMI 134 - AT - Central Excise

CENVAT Credit - process amounting to manufacture or not - credit availed on high quality RBD Palm Stearin procured by them - Department was of the view that the process does not amount to manufacture and hence appellants are not eligible for credit - HELD THAT - It is not in dispute that appellants cleared the final products on payment of excise duty. The show-cause notice has been issued alleging that the process does not amount to manufacture - When the appellant has discharged excise duty on the final product, the credit cannot be disallowed on the inputs alleging that the process does not amount to manufacture. Credit allowed - appeal allowed - decided in favor of appellant.

Summary

Issues:
Disallowance of Cenvat credit on high quality RBD Palm Stearin alleged to be used in the manufacture of final products.

Analysis:
The case involved the appellants, engaged in manufacturing various products, availing Cenvat credit on high quality RBD Palm Stearin. The department contended that the process did not amount to manufacture, leading to the disallowance of credit. Show-cause notices were issued for specific periods, and penalties were imposed after the original authority confirmed the demand. The Commissioner (Appeals) upheld the decision.

During the appeal, the appellant's counsel argued that the high-density RBD Palm Stearin was used to manufacture a final product of low density, which was cleared after paying excise duty. The appellant had paid duty on inputs and final products, citing a relevant case to support their argument.

The Authorized Representative for the Revenue supported the findings of the impugned order, leading to a hearing where both sides presented their arguments. The crucial issue revolved around whether disallowing credit on inputs used in manufacturing final products was justified. The appellant had paid excise duty on the final products, and the department's contention that the process did not amount to manufacture was challenged.

The tribunal, referencing a prior decision, concluded that if excise duty was paid on the final product, disallowing credit on inputs post-payment was unjustified. It was noted that the department should have informed the appellant before duty payment if the process was deemed non-manufacture. Given the circumstances and the precedent, the tribunal set aside the impugned order, allowing the appeal with any consequential reliefs.

The judgment highlighted the importance of clarity regarding the manufacturing process and excise duty implications, emphasizing that disallowing credit after duty payment was unwarranted. The decision provided a legal precedent for similar cases involving credit disallowance on inputs used in manufacturing final products.