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TMI Blog2024 (2) TMI 1018X X X X Extracts X X X X X X X X Extracts X X X X ..... ot amount to manufacture. In the case of M/s. R K Packaging Vs. CCE, Mumbai [ 2019 (3) TMI 1500 - CESTAT MUMBAI ], the issue considered was whether the credit availed has to be reversed when the activity is alleged to be not manufacture. The demand was set aside by the Tribunal following the decision of the Hon ble High Court of Bombay in Ajinkya Enterprises. The demand cannot sustain and requires to be set aside. The impugned order is set aside - Appeal allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... o render the product marketable to the consumer,] 1.5. The goods received from Unit I were already marketable since they were cleared as such by the appellant i.e. without subjecting them to any process viz. packing or repacking, labelling or re- labelling. Since clearance of the goods as such, does not amount to manufacture in terms of Section 2 (f) (iii) of Central Excise Act, 1944 the appellant is not eligible to avail the CENVAT credit on the goods received from Unit I. 1.6. Besides, CENVAT credit on inputs can be availed only when used in or in relation to manufacture of final products in terms of Rule 3 read with Rule 2 (k) of CENVAT Credit Rules, 2004. 1.7. The goods received from the unit I were not used by the appellant in or in relation to the manufacture of final products because the goods themselves were final products and were cleared as such to the spare market by the appellant. 1.8. Therefore, the credit Rs 11,54,59,277/- wrongly availed by the appellant on the goods received from the Unit-1 during the period from September 2010 to March, 2012 was liable to be recovered along with interest under Rule 14 of CENVAT Credit Rules, 2004 read with Sections 11A and 11AB ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order. 2. The Ld. Counsel Shri Prakash Shah and Shri S. Durairaj appeared and argued on behalf of the appellant. It is submitted that the appellant having paid duty on the clearances, the department cannot deny the credit alleging that the process does not amount to manufacture. 2.1. The department has denied the CENVAT credit of duty paid on the clutches received from the Unit 1 on the sole ground that the appellant did not carry out any manufacturing activities and removed these goods as such. 2.2. It is asserted by the Ld. Counsel that every piece of clutch cleared from Unit II was duly assessed and cleared on payment of duty against invoice issued under Rule 11 of the Central Excise Rules, except the clutches cleared for export under bond, for which demand is already dropped. The details of clearances and payment of duty there was duly reflected in the ER I returns. Duty payment details of such removals were shown under "credit utilized for payment of duty on goods" in column 8 of the ER-1 returns. The department accepted the duty payment and returns filed by the appellant without demur. 2.3. The self-assessed duty paid by the appellants was duly accepted by the department ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nced arguments on the ground of limitation also. The provisio to Section 11 A would be attracted only when there is an intend to evade payment of duty. The appellant has paid duty and on the finished products and therefore there is no intention to evade payment of duty. The invocation of extended period alleging that the appellant has suppressed facts with intend to evade duty is without any basis. The Ld. counsel prayed that the appeal may be allowed. 3. The Ld. AR Shri Rajaraman supported the findings in the impugned order. 3.1. The issue to be considered is whether the demand raised alleging that the credit availed by the appellant is ineligible for the reason that there is no manufacturing process undertaken by the appellant on goods received from Unit I and cleared by them is sustainable or not. The facts reveal that the appellant has paid duty on all goods cleared by them. The allegation of the department is that the goods received from Unit 1 are complete as to their packing and fixation of MRP. Therefore, there is no activity of manufacture undertaken by the appellant so as to packing or relabelling and there is no activity of deemed manufacture as per 2 f (iii) of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 39;ble Bombay in the case of Ajinkya Enterprises (supra), by upholding the finding of this Tribunal that if the activity does not amount to manufacture and the goods have been cleared on payment of duty, in such case, the duty paid by the assessee which has been accepted by the department and more than the credit availed. In that circumstances, the duty paid by the assessee shall amount to reversal of credit and the assessee is not required to reverse the credit. Admittedly in this case, the appellant cleared the said imported goods after refilling on payment of duty. Therefore, if the activity does not amount to manufacture, in that case, the duty paid by the appellant shall amount to reversal of credit. Therefore, the appellant is not required to reverse the credit of CVD availed by the appellant at the time of import. 3.4. In the case of M/s. R K Packaging Vs. CCE, Mumbai 2019-TIOL-988-CESTAT, Mumbai, the issue considered was whether the credit availed has to be reversed when the activity is alleged to be not manufacture. The demand was set aside by the Tribunal following the decision of the Hon'ble High Court of Bombay in Ajinkya Enterprises. The relevant para reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the department, the CENVAT credit availed on the inputs need not be reversed even if the activity does not amount to manufacture. 5. "We have carefully considered the submissions advance by both sides. The short issue involved in the present appeal for determination is whether the assessee is entitled to CENVAT credit of duty paid on raw materials which were processed and resulted into finished product and cleared on payment of duty. The allegation of the Revenue is that since the process of manufacture undertaken on the raw material did not amount to 'manufacture', within the definition of Section 2 (f) of the Central Excise Act, 1944, hence, the appellant was not required to discharge duty, accordingly, not entitled to avail credit on the inputs. We find that the issue is no more res integra being covered by the judgement of the Hon'ble Bombay High Court in the case of Ajinkya Enterprises (supra). The Lordships, after taking note of the relevant provisions of law, observed as follows:- "10. Apart from the above, in the present case, the assessment on decoiled HR/CR coils cleared from the factory of the assessee on payment of duty has neither been reversed nor it held that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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