CENVAT - If department levies and collects CX duty on goods removed from factory, they cannot claim, for purpose of allowing CENVAT credit, that process of manufacture had not taken place: CESTAT
By TIOL News Service
NEW DELHI, JAN 06, 2015: THE CCE, Rohtak held that converting black rods/bars into bright bars did not amount to manufacture during the relevant period (May 2003-April 2004) and, therefore, the CENVAT credit taken on capital goods/black rods/bars used for making bright bars was not admissible.
Accordingly, the adjudicating authority disallowed the CENVAT credit of Rs.68.24 lakhs [Rs.67.72 lakhs on inputs & Rs.52,000/- on capital goods] and ordered recovery of the same alongwith interest and an equivalent penalty. This order was passed in September, 2013.
Before the CESTAT the appellant submitted that the total duty paid by them is more than the amount of credit taken and, therefore, the question of willful misstatement/suppression of facts with intent to evade payment of duty would not arise. They also cited a plethora of judgments to the effect that if the duty paid on the final product is more than the amount of credit taken then the question of reversal of the CENVAT credit taken on the ground that the process did not amount to manufacture would not arise.
Noting that the issue is covered by various judicial pronouncements, the Bench waived the pre-deposit and proceeded to decide the appeal.
The Bench observed that it was pointless to indulge in any discussion regarding the contention of the appellants that their process amounted to manufacture as the issue is no longer resintegra for the relevant period. Inasmuch as the process of conversion of black bars/rods into bright bars does not amount to manufacture was declared by the Supreme Court in the case of VeeKayan Industries Vs. Collector of CE, Chandigarh and followed by CESTAT in the case of Geeta Bright Bar Works Pvt. Ltd.
The CESTAT also adverted to the decisions in Super Forgings and Steels Ltd. vs. CCE, Chennai 2007-TIOL-2040-CESTAT-MAD, where it is held that there is no question of recovery of CENVAT credit which has been utilized towards payment of duty of the final products even when the process did not amount to manufacture; case of CCE, Indore vs. M.P. Telelinks Ltd. 2004-TIOL-77-CESTAT-DEL & CCE, J&K Jammu Vs. North Sun Enterprises Industrial Estate - 2012-TIOL-1922-CESTAT-DEL where CESTAT held that if the department levies and collects the Central Excise duty on the goods removed from the factory, they cannot claim for the purpose of allowing CENVAT credit that the process of manufacture had not taken place.
The CESTAT further added –
"Recently CESTAT in the case of Polyrub Extrusions (I) Pvt. Ltd. Vs. CCE Belapur - 2014-TIOL-1867-CESTAT-MUM has held as under:
3. The contention of the learned Counsel is that the appellants has processed the inputs and the same has been cleared on payment of duty therefore, if their activity is to be held as amounts to manufacture, the duty paid for clearance may be treated as reversal of CENVAT credit in the light of the decision of this Tribunal in the case of Ajinkya enterprises - 2011-TIOL-1333-CESTAT-MUM which has been affirmed by the High Court of Bombay- 2012-TIOL-578-HC-MUM-CX .
4. As the issue is no longer res intergra in the light of this Tribunal in the case of Ajinkya Enterprises (supra) which has been affirmed by the Hon'ble Bombay High Court therefore, we hold that the appellant is entitled for CENVAT credit. Accordingly, the impugned order is set aside and the appeal is allowed with consequential relief, if any.”
In fine, the appeal was allowed.
In passing : One may be compelled to ask - With all these decisions that directly apply to the case on hand easily available at the time of adjudication, was it prudent on the part of the adjudicating authority to confirm the demand?... harassment!
(See 2015-TIOL-43-CESTAT-DEL)
