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TMI Blog2025 (3) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... conversion i.e., cutting/slitting of the goods, the resultant products, i.e. M.S. Plates were removed by debiting an amount as prescribed under Rule 16(2) of the said rules. This procedure adopted by them was known to the Department as the said procedure was advised by the jurisdictional Assistant Commissioner. Extended period of limitation - suppression of facts or not - HELD THAT:- There is no suppression of facts with intention to evade the duty established against the Respondent in this case. Hence, the ld. adjudicating authority has rightly held that the extended period is not invocable in this case and dropped the demand raised in the notices by invoking extended period of limitation. Non-imposition of penalty under Rule 15(1) of the CENVAT Credit Rules, 2004 - HELD THAT:- In the instant case, the Respondent has paid an amount equal to the credit taken while clearing the goods after processing. The Department has accepted the equal amount of credit paid by the Respondent under Rule 16(2) of the Central Excise Rules, 2002. In a catena of decisions it has been held that though the process does not amount to manufacture, credit on inputs cannot be denied as the manufacturer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the CENVAT Credit Rules, 2004. 1.1. On the basis of the above allegations, the following notices were issued to the Respondent. Sl. No. Show Cause Notice No. DATE PERIOD CENVAT E.CESS S&HE CESS TOTAL 1 V(15)2/HAL/AE/SRCU/ 2010/24948 29-11- 2010 NOV,05- MAR,10 34,82,36,460/- 69,64,747/- 26,35,253/- 35,78,36,460/- 2 V.Ch.48(15)53/CE/HAL /Adjn/11/7423 09-05- 2011 APR,10- MAR,11 5,36,48,821/- 10,72,981/- 5,36,496/- 5,52,58,298/- 3 V.Ch.72(15)33/CE/HAL /Adjn/2012/6691 25-04- 212 APR,11- MAR,12 1,08,10,519/- 2,16,293/- 1,08,111/- 1,11,34,923/- TOTAL 41,26,95,800/- 82,54,021/- 32,79,860/- 42,42,29,681/- 1.2. All the above Notices were taken up together for adjudication in common proceedings. On adjudication, the ld. adjudicating authority held that extended period of limitation could not be invoked in the instant case as there was no suppression of facts on the part of the Respondent and therefore, held that the demand pertaining to the period from November, 2009 to March 2010 in respect of the first Show Cause Notice and the entire demand raised in respect of the other Two Show Cause Notices, are justified. Accordingly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... djudicating authority had disallowed the CENVAT Credit and ordered for recovery of the same, penalty under Rule 15(1) of the CENVAT Credit Rules, 2004 should have been imposed. Thus, the Committee opined that the ld. adjudicating authority erred in his decision by not imposing any penalty under Rule 15(1) of CENVAT Credit Rules, 2004. 2.2. Accordingly, Revenue has filed appeal against the impugned order for determination of the following: (i) Whether the Commissioner has erred in his decision by partial dropping of the demand for the period from 1st November, 2005 to March 2010 for the first Show Cause Notice as the Noticee did not comply the letter/order dated 12.07.2006 of the Assistant Commissioner to follow the procedure laid down in Rule 3(4) (b) of the CENVAT Credit Rules, 2004 and continued availing CENVAT Credit fully knowing that such availment is irregular. (ii) Whether the Commissioner has erred in his decision by not imposing any penalty under the provisions of Rule 15(1) of CENVAT Credit Rules, 2004 in the Order-in-Original No. 23-25/Commr/CE/Kol-II/Adjn/2015-16 dated: 31.03.2016. 3. None appeared on behalf of the respondent. The matter is however taken up for di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not amount to manufacture. Since the process does not amount to manufacture, the Respondent took recourse of Rule 16 of the Central Excise Rules, 2002, i.e. they used to bring the H.R. Coils under Rule 16(1) of the said rules and availed CENVAT Credit in terms of the said rules. After the conversion i.e., cutting/slitting of the goods, the resultant products, i.e. M.S. Plates were removed by debiting an amount as prescribed under Rule 16(2) of the said rules. This procedure adopted by them was known to the Department as the said procedure was advised by the jurisdictional Assistant Commissioner. 5.1. We find that the jurisdictional Assistant Commissioner vide his letter C.No. V(30)8/CE/Tech/HWD-I/Misc/2005/2928 dt. 22.09.2006 directed the Respondent to follow Rule 16(2) of the Central Excise Rules, 2002. Even after the issue of the Circular No. 911/01/2010-CX. Dated 14-01-2010, the jurisdictional Assistant Commissioner vide his letter C.No. CE-20/SUL/Rg- 11/HWD-1/2004/04 dt. 21.01.2011 informed the Respondent that they may approach the Commissioner in terms of Rule 16(3) of the said rules, if they want to continue to follow the same procedure under Rule 16. Thus, we observe that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... edit on these goods i.e. HR/CR coils as their activity does not amount to manufacture. Therefore, the CENVAT credit taken by them is wrong and in that event, they are required to reverse the CENVAT credit. He further submitted that the duty was paid without any authority of law. Therefore, the question of allowing the credit on input does not arise. He relies on the decision of Velere Power India Pvt. Ltd. (supra), wherein it was held by this Tribunal that CENVAT credit was taken wrongly and duty equal to CENVAT credit is required to be paid under Rule 3(5) of Cenvat Credit Rules when the activity does not amount to manufacture. In that case the assessee took the credit on the inputs and after processing of inputs, the final products were cleared on lower value. The activity did not amount to manufacture but the duty was paid less at the time of clearance of the goods at lower value although the CENVAT credit was taken more than the duty paid. Therefore, differential duty was asked to be paid. Therefore, we are of the view that the ratio laid down in the decision of Velere Power India (supra) supports the case of the appellant. This is not the fact in this case before us. 8. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... om the facts of this case where as per Circular dated 7-9-2001, the activity of slitting of HR/CR coils into strip was amounted to manufacture. It is admitted fact that the said Circular was withdrawn on 2-3-2005. Thereafter, the appellants sought clarification through various letters to the department to clarify whether the composite activity of de-coiling of HR/CR coils, cutting and slitting into specific sizes and thereafter pickling and oiling amounting to manufacture or not. That was clarified only on 24-6-2010. In the case of Resistance Alloys (supra) and P.V. Sanghvi (supra), wherein it was held that process of pickling and oiling would not amount to manufacture, but in the case in hand before us, the appellants were undertaking composite activity of de-coiling of HR/CR coils thereafter cutting and slitting into specific sizes and after that pickling and oiling taken place, which was clarified by the department only on 24-6-2010 saying that the said activity does not amount to manufacture. Therefore, following instructions issued through Circular No. 911/1/2010-CX., dated 14-1-2010, the appellants approached to the Commissioner for issuance of appropriate rectification for r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ants. Therefore, following the various judicial pronouncements as discussed herein above, we hold that the appellants are not required to reverse the credit. Accordingly, the appeals are allowed with consequential relief." 7.2. By relying on the decision cited supra, we hold that the Respondent has rightly availed credit on the inputs and paid an amount equal to the credit taken at the time of clearance of the goods as provided under Rule 16(2) of the Central Excise Rules, 2002. Thus, we observe that the allegation of irregular availment of credit against the Respondent does not survive. Once, the credit availed by the Respondent is found to be regular, there is no irregularity in utilising the same to discharge the payment as per Rule 16(2) of the Central Excise Rules. Since the availment of credit and subsequent utilisation of the same for paying the amount as per Rule 16(2) of the Central Excise Rules,2002 are found to be regular, we hold that no penalty imposable on the Respondent. Consequently, we do not find any infirmity in the impugned order passed by the Ld. adjudicating authority. 8. In view of the above discussions, we uphold the impugned order passed by the ld. adjudi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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