2025 (3) TMI 262 - AT - Central Excise

Process amounting to manufacture - whether the excise duty paid by appellant by utilizing the CENVAT credit is recoverable? - HELD THAT - While disposing the Revenue appeal regarding manufacture it is beyond the scope of show cause notice since there is no such allegation as to the activity of the appellant not falling under manufacture in the Show cause notice. Moreover the issue is well settled by the decision of this Tribunal in M/S. MINERAL ENTERPRISES LIMITED VERSUS COMMISSIONER OF CUSTOMS AND SERVICE TAX 2017 (5) TMI 99 - CESTAT BANGALORE M/S. MINERALS ENTERPRISES LTD. VERSUS THE COMMISSIONER OF CENTRAL EXCISE BANGALORE 2017 (10) TMI 500 - CESTAT BANGALORE and M/S. MINERAL ENTERPRISES LTD. VERSUS THE COMMISSIONER OF CUSTOMS BANGALORE 2024 (8) TMI 848 - CESTAT BANGALORE holding that the activity carried out by the Appellant is manufacture. As regards allegation of considering the excise duty paid by the appellant has deposit there are strong force in the contention of the appellant that once the duty is not exempted absolutely as per the provision of Section 5(1) of the Central Excise Act it is an option available to the appellant to either opt for the benefit of Notification No. 23/2003-CE or not and it is for the assessee to decide the best method of making payment and merely if the assessee fails to avail the benefit of said notification no allegation can be made that they have made an attempt to evade duty and to confirm demand of duty and impose penalty alleging violation of provision of law. Conclusion - The findings on manufacture by the Appellate Authority are beyond the scope of the Show Cause Notice and were settled by previous Tribunal decisions in favor of the appellant. Appeal allowed.

Summary

The issue in the present appeal before the Appellate Tribunal was whether the activity carried out by the appellant, an EOU engaged in the manufacture and export of iron ore lumps and fines, amounted to manufacture and whether the excise duty paid by the appellant utilizing CENVAT credit was recoverable.The Appellant cleared their manufactured excisable goods into DTA without claiming exemption and paid excise duty using CENVAT credit. The Revenue alleged that the duty paid was recoverable as it was passed on to customers and collected in cash, treating it as a deposit recoverable under the CENVAT Credit Rules, 2004. The Adjudication Authority confirmed the demand, leading to appeals by both the appellant and the department before the Commissioner (Appeals). The Commissioner (Appeals) held that the process undertaken by the appellant did not amount to manufacture and that the goods were not dutiable, upholding the department's appeal. This decision was challenged before the Tribunal.During the hearing, the appellant's counsel argued that the Commissioner (Appeals) exceeded the scope of the Show Cause Notice by determining that the process did not amount to manufacture. They cited various decisions in support of their contention. The counsel also highlighted relevant provisions, including an exemption under Section 5A(1A) of the Central Excise Act, 1944, and Notification No. 23/2003-CE.The appellant's counsel further argued that the mining activity undertaken by the appellant amounted to manufacture, contrary to the Commissioner (Appeals) finding. They referenced previous Tribunal orders in the appellant's favor on the issue of manufacture. Additionally, they relied on legal principles that when there are multiple provisions or exemptions available, the assessee has the right to choose the most beneficial option.The Authorized Representative for the department reiterated the findings of the impugned order, emphasizing that the appellant had deliberately paid duty to pass on the cost to customers for monetary gain.The Tribunal held that the findings of the Appellate Authority on manufacture were beyond the scope of the Show Cause Notice and referenced previous Tribunal orders supporting the activity as manufacture. They also agreed with the appellant's argument that the duty paid was not a deposit but a legitimate payment, and the appellant had the right to choose whether to claim exemption or not. Therefore, the Tribunal found the impugned order unsustainable and allowed the appeal with consequential relief.In conclusion, the Tribunal allowed the appeal, setting aside the impugned order, and provided relief to the appellant in accordance with the law.