Input credit regularisation for wire drawing activity sustained under retrospective amendment and circular clarification.

A retrospective amendment to Rule 16, read with the Board circular, regularised credit taken on inputs used in wire drawing and its utilisation for duty on drawn wire. The clarification showed that wire drawing units which had availed input credit and paid duty on the drawn wire were intended to be covered by the amendment. On that basis, credit on wire rods used in wire drawing activity was admissible, and the demand could not be sustained.

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Issues: Whether credit on wire rods used in wire drawing activity was admissible in light of the retrospective amendment to Rule 16 and the Board circular clarifying regularisation of credit.

Analysis: The circular issued after the retrospective amendment explained that wire drawing units which had availed credit on inputs and paid duty on drawn wire were intended to be covered by the amendment. The clarification treated the duty paid at the wire-drawing stage as regularisable credit and stated that the amendment was meant to regularise credit taken at the input stage and its utilisation for payment of duty on drawn wire. On that basis, the appellant's availment of credit on wire rods fell within the scope of the amendment and the circular.

Conclusion: The credit was admissible and the demand could not be sustained; the finding was in favour of the assessee.

Final Conclusion: The impugned order was set aside and the appeal succeeded.

Ratio Decidendi: Where a retrospective amendment and the corresponding circular expressly regularise credit taken on inputs used in wire drawing, such credit cannot be denied merely because the process was earlier treated as non-manufacturing.

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