CENVAT credit and Section 11D: credit upheld and recovery barred where duty on finished goods was already paid.

CENVAT credit on inputs used in a process alleged not to amount to manufacture was upheld where duty had already been paid on the finished goods, so denial of credit was not justified. Section 11D of the Central Excise Act was held inapplicable because it targets amounts collected as duty that are not deposited with the Government; here, the duty on the finished goods had already been remitted. The assessee's relief therefore remained undisturbed and the substantive challenge failed.

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Issues: (i) Whether CENVAT credit taken on inputs used in a process treated as non-manufacture could be denied when duty had been paid on the finished goods; (ii) whether Section 11D of the Central Excise Act could be invoked to recover amounts collected from customers as duty when the duty on the finished goods had already been paid to the Government.

Issue (i): Whether CENVAT credit taken on inputs used in a process treated as non-manufacture could be denied when duty had been paid on the finished goods.

Analysis: The lower authorities had concurrently found that the assessee paid duty on the finished products, and the record disclosed a line of Tribunal decisions holding that credit on inputs used in such cleared goods could not be denied merely because the underlying process was alleged not to amount to manufacture. No sustainable ground was shown to disturb those concurrent findings.

Conclusion: The denial of CENVAT credit was not justified.

Issue (ii): Whether Section 11D of the Central Excise Act could be invoked to recover amounts collected from customers as duty when the duty on the finished goods had already been paid to the Government.

Analysis: Since the assessee had already discharged duty on the finished goods, the collections from customers were towards duty already remitted to the State. Section 11D was held applicable only where a person collected duty and did not pay it into the Central Government account, and the present facts did not attract that situation.

Conclusion: Section 11D was not applicable.

Final Conclusion: The appeal failed on all substantive grounds and the relief granted by the lower authorities in favour of the assessee stood undisturbed.

Ratio Decidendi: CENVAT credit cannot be denied merely because the process in which the inputs were used is alleged not to amount to manufacture, where duty has been paid on the finished goods, and Section 11D does not apply to amounts collected as duty that has already been paid to the Government.

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