CX - Oiling & Pickling of H R Coils - Once assessee considered activity as amounting to manufacture and discharged duty liability, question of availing CENVAT credit cannot be disputed holding that there is no manufacture - CENVAT credit cannot be denied: CESTAT
By TIOL News Service
MUMBAI, FEB 17, 2016: THE assessee is a manufacturer of various products like G.P. Coils, G.P. Sheets, G.C. Sheets, C.R. Sheets, C.R. Coils, and H.R. Pickled and Oiled Coils [Ch. 72]. They cleared the final products "H.R. Oiled Coils and Pickled Coils" [TI 72083940] on payment of duty.
The stand taken by the original authority is that since the aforesaid goods H.R. Oiled Coils and Pickled Coils were not resulting from a manufacturing process, the assessee could not have availed CENVAT credit and discharged CE duty by utilizing the same.
The Revenue relies upon the CBEC Circular No. 927/17/2010-CX dated 24.06.2010 wherein it is clarified that merely undertaking the process of oiling and pickling as preparatory steps do not amount to manufacture.
Based on the aforesaid Circular the adjudicating authority dropped the demand for the period prior to 24.06.2010 and confirmed the demands post 24.06.2010.
Both, the assessee and Revenue are before the CESTAT.
The appellant, inter alia , submitted that the CENVAT credit which has been denied to the assessee is less than the amount of duty paid by them for the period in question. Further, oiling and pickling of H.R. coils is a manufacturing process for de-scaling of oxide films by a combination of mechanical and chemical process which helps to retard corrosion during storage after de-scaling and the value of the coils is maintained; that oiling and pickling of H.R. Coils is done and are used for specific applications which requires clean uniform surface and good flatness for forming, painting or plating and for such activity without carrying out the entire manufacturing process of pickling & oiling, H.R.Coils cannot be used. Furthermore, since the assessee has discharged duty liability more than the CENVAT credit availed, they have in a way reversed the CENVAT credit which is sought to be demanded from them. Reliance is placed on the following decisions in support - Ajinkya Enterprises - 2011-TIOL-1333-CESTAT-MUM [affirmed - 2012-TIOL-578-HC-MUM-CX], Foam Techniques Mfg. (I) Pvt. Ltd. - 2015-TIOL-156-CESTAT-MUM, Bajaj Auto Ltd. - 2003-TIOL-330-HC-MUM-CX & R.B. Steel Services - 2015-TIOL-43-CESTAT-DEL.
The AR supported the order of confirmation of demand and placed reliance on the following decisions viz. Inductotherm (I) Pvt. Ltd. - 2012-TIOL-929-HC-AHM-CX, Ratan Melting & Wire Industries - 2008-TIOL-194-SC-CX-CB, Matador Foam - 2005-TIOL-154-SC-CX.
The Bench after considering the submissions observed
"7.1 Various submissions were made before us by both the sides as to whether the activity of pickling and oiling of H.R. Coils amounts to manufacture or otherwise. In our considered view, instead of going into the issue on this point the matter in hand can be resolved only on the point, as to whether the assesse has discharged the duty liability which is more than the CENVAT Credit availed on the inputs or not. It is on record and undisputed that during the period post 24.06.2010, assessee had cleared the products as manufactured products on payment of appropriate duty, which was more than the CENVAT credit availed by them on the inputs which were used. The ratio of the Hon'ble High Court's judgment in the case of Ajinkya Enterprises (supra) would be applicable in the case in hand as in that case also the issue was regarding oiling and pickling, cutting and slitting of H.R/C.R. Coils is the same….
7.2 We also find that this Bench in the case of Foam Techniques Mfg. (I) Pvt. Ltd. (supra) (wherein one of us, M.V. Ravindran was a Member) following the judgment of the Hon'ble High Court in the case of Ajinkya Enterprises (supra) held that once the assessee considered the activity as amounting to manufacture and discharges the duty liability, the question of availing CENVAT credit cannot be disputed holding that there is no manufacture. The said ratio has also been upheld by the Apex Court in the case of Creative Enterprises, the Hon'ble High Court of Gujarat, as reported in 2008-TIOL-784-HC-AHM-CX has held that having discharged the duty liability, availing of CENVAT credit cannot be questioned. Revenue aggrieved by such judgment of the High Court, filed a SLP before the Apex Court and the Apex Court dismissed the same as reported in 2009 (243) ELT A120 (SC).
7.3 We find that the principal Bench of this Tribunal in the case of R.B. Steel Services (supra) were also considering an identical issue in respect of process of conversion of black bars/rods into bright bars and availment of CENVAT credit on the inputs. The Tribunal after considering the issue and the case law, relied upon the judgment of the Hon'ble High Court of Bombay in the case of Ajinkya Enterprises (supra) stated that the issue is no more res integra."
Holding that the orders confirming the CENVAT demand are unsustainable, the same were set aside.
The appeals of the assessee were allowed and that of Revenue were rejected.
(See 2016-TIOL-437-CESTAT-MUM)
