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TMI Blog2011 (7) TMI 975X X X X Extracts X X X X X X X X Extracts X X X X ..... redit availed by them or not? Held that:- the appellant have taken inadmissible credit, therefore, they were issued show-cause notices to reverse the same. From the facts of this case it is very much clear that the appellant have taken inadmissible credit but they have paid the same at the time of clearance with value addition. In that scenario, as held by the Hon'ble apex court in the case of Narmada Chematur Pharmaceuticals Ltd. (2004 (12) TMI 93 - SUPREME COURT OF INDIA) where the assessee has wrongly availed modvat credit and was liable to reverse such amount and it was stated that the duty paid and modvat credit availed were identical and therefore consequences of payment of excise duty after availing the credit was revenue neutral. - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.2 During the scrutiny of the E.R-1 filed by them for the month of January 2005, it was noticed that the appellant had made an endorsement in the second page of the said E.R-1 as follows: "REMARKS- THE MANAGEMENT HAD DECLARED VRS TO WORKMEN OF OUR THANE FACTORY AND THEY HAD OPTED FOR IT ON 31-12-2004 HENCE THERE WILL BE NO PRODUCTION ACTIVITY OF OUR FINAL PRODUCT (I.E. FILES & RASPS CH. 8203.00 FROM 1-1-2005) FURTHER, WE HEREBY DECLARE THAT WE WILL BE CLEARING. THE MATERIALS LYING IN OUR STOCK ON PAYMENT OF DUTY FOR HOME OR UNDER LUT FOR EXPORT AS AND WHEN THE BUYERS ORDER COMES IN HAND." 2.3 As per E.R-1 filed by them for the month of December 2004 the balance semi finished goods lying in stock were as given below: Semi fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... les, 2004. After conversion, they either cleared the said Rod and Bars for home consumption on payment of duty i.e. by debiting from CENVAT Credit or exported them under bond. 2.7 It appeared that the appellant, after receiving the inputs viz. Bars and rods of Alloy Steel, chisels were doing only softening process, which did not amount to 'manufacture' as per the definition of 'manufacture' under Section 2(f) of the Central Excise Act, 1944. As they were not carrying out any manufacturing activity, the appellant were not eligible to avail CENVAT credit on the inputs and were basically clearing the inputs, as such, for job work under Rule 4(5)(a) of CENVAT Credit Rules, 2004, and were also not eligible to utilize the said cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was liable to be recovered. 2.10 Therefore, show-cause notices were issued to the appellants proposing demand and recovery of CENVAT credit availed on inputs for the period January 2005 to February 2007 under Section 11A of the Central Excise Act, 1944 read with Rule 14 of the CENVAT Credit Rules, 2004, for imposing penalty under Rule 15(1) of CENVAT Credit Rules, 2004 and for recovery of interest under Section 11AB of the Act. The show-cause notices were adjudicated, duty demands were confirmed along with interest and equivalent amount of penalty. 3. The adjudication order for the period up to July 2005 was challenged before the Commissioner (Appeals) who also upheld the adjudication order. Therefore, aggrieved by both the orders, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate applicable on the date of removal. It is on record that the appellant have paid the duty on the impugned goods after value addition and the same may be treated as reversal of the credit availed. Therefore, the impugned orders are not sustainable in the eyes of law. To support his contentions he placed reliance on Singh Scrap Processors Ltd. vs. Commissioner of Central Excise, Mumbai - I 2002 (143) ELT 619 (Tri.-Mumbai); Vickers Systems International Ltd. vs. Commissioner of Central Excise, Pune - I 2008 (10) STR 378 (Tri.-Mumbai); Deioners Speciality Chemicals (P) Ltd. vs. Commissioner of Central Excise, New Delhi 1997 (96) ELT 659 (Tribunal) and Commissioner of Central Excise& Customs, Vadodara vs. Narmada Chematur Pharmaceuticals Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be imposed on them which has been confirmed by the lower authorities. Therefore, he prayed that the impugned orders be upheld. 6. Heard and considered the submissions made by both the sides. 7. On careful consideration of the arguments advanced by rival sides, we find that in this case, the basic issue is that when the appellants themselves have informed the department that after 31/12/2004 they have ceased their character of 'manufacturer' and in that case they have retained the inputs on which they have availed CENVAT credit and an activity of softening was undertaken by them and cleared on payment of duty on input plus value addition. In such a situation, whether the appellant are required to reverse the CENVAT credit av ..... X X X X Extracts X X X X X X X X Extracts X X X X
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