2023 (12) TMI 1060 - AT - Central Excise

Irregular availment of CENVAT Credit - imported goods - cleared as such as the said tools neither inputs nor capital goods used in or in relation to the manufacture of their final products - process not amounting to manufacture - HELD THAT - In the present case, the appellants are engaged in the manufacture of various high precision tools, and also import certain parts used as inputs. The tools were customised and sold by the appellant on payment of appropriate duty of excise on its transaction value, which was more than the credit availed on the inputs. The Revenue disputed the processes undertaken on the imported items alleging the same do not result into manufacture of a new item different from the inputs; hence the activity undertaken by the appellant is purely in the nature of trading; therefore, cenvat credit availed on the inputs cannot be admissible. This issue is no more res integra as it has already been settled by various decisions as cited by the learned counsel for the appellant. In THE COMMISSIONER OF CENTRAL EXCISE, PUNE VERSUS AJINKYA ENTERPRISES 2012 (7) TMI 141 - BOMBAY HIGH COURT , the Bombay High Court taking note of the arguments of the Revenue, more or less in the same line observed once the duty on final products has been accepted by the department, CENVAT credit availed need not be reversed even if the activity docs not amount to manufacture. There are no merit in the impugned order. Consequently, the impugned order is set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are related to the admissibility of cenvat credit on imported/locally procured inputs used in the manufacturing process and the subsequent clearance of goods 'as such' by the appellant, which the Revenue disputed as not amounting to a process of manufacture.

Details of the Judgment:

Issue 1: Admissibility of cenvat credit on inputs used in manufacturing process
The appellant, engaged in manufacturing high precision tools, imported certain parts as inputs and availed cenvat credit on them as per Cenvat Credit Rules, 2004. The Revenue disputed the processes undertaken by the appellant, alleging that they do not result in the manufacture of a new item different from the inputs. The appellant contended that the duty paid on inputs cleared 'as such' is higher than the credit availed, citing previous tribunal and high court judgments supporting their position. The Tribunal noted that the issue has been settled by previous decisions, including the Bombay High Court and Gujarat High Court rulings, which held that once duty on final products is accepted by the department, cenvat credit need not be reversed even if the activity does not amount to manufacture. The Tribunal found no merit in the impugned order and allowed the appeal based on the settled legal principles.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, citing the settled legal principle that cenvat credit availed on inputs used in the manufacturing process, even if the activity does not amount to manufacture, does not need to be reversed once duty on final products is accepted by the department.