CENVAT credit on steel wires upheld where retrospective Rule 16(3) regularised duty-paid inputs for recipient use.

CENVAT credit on steel wires used to manufacture ACSR conductors was held admissible to the recipient unit because the credit was taken on inputs actually received and used in dutiable final products. The dispute whether the supplier's wire-drawing process amounted to manufacture did not justify denial of credit at the recipient stage when duty had been paid on the goods received. The retrospective insertion of Rule 16(3) of the Central Excise Rules, 2002 also regularised the position for the relevant period by treating the amount paid by the wire-drawing unit as eligible for credit as duty paid, so the Revenue's challenge failed.

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Issues: Whether CENVAT credit on steel wires used in the manufacture of ACSR conductors was admissible to the recipient unit, where the department contended that the upstream process of drawing wire from wire rods did not amount to manufacture and that no duty was payable on the inputs.

Analysis: The credit was taken on steel wires actually received and used as inputs in the manufacture of dutiable final products. The dispute at the supplier's end regarding whether wire drawing amounts to manufacture did not, by itself, justify denial of credit at the recipient's end when duty had been paid on the goods received. The retrospective insertion of Rule 16(3) of the Central Excise Rules, 2002 also regularized the position for the relevant period and treated the amount paid by the wire drawing unit as eligible for credit as if it were duty paid.

Conclusion: The credit was admissible and the Revenue's challenge failed.

Final Conclusion: The retrospective amendment cured the dispute for the relevant period and the denial of credit could not be sustained, so the Revenue's appeal was rejected.

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