2014 (1) TMI 375 - AT - Central Excise

CESTAT Tribunal Reverses Denial of Cenvat Credit, Sets Precedent for Non-Manufacturing Activities

The Appellate Tribunal CESTAT NEW DELHI reversed the denial of Cenvat credit on inputs/raw materials for non-manufacturing activities, citing the ... Activity manufacture or not - Denial of Cenvat credit – Duty paid on various inputs / raw materials not utilized for payment of duty on the final product - activity of cutting of HR/CR coils of iron and non-allied steel into sheets or slitting into strips – Held that:- As no manufacturing activity was undertaken by the appellant, they cannot be held entitled to avail the Cenvat credit - the appellant has discharged the central excise duty on their final product, by utilizing the Cenvat credit - by debiting the Cenvat credit while paying the duty on their final product, the entire Cenvat credit stand reversed - Even otherwise, it is revenue neutral situation – following COMMISSIONER OF C. EX. & CUS., VADODARA Versus NARMADA CHEMATUR PHARMACEUTICALS LTD.[ 2004 (12) TMI 93 - SUPREME COURT OF INDIA] – order set aside – Decided in favour of Assessee. Issues: Denial of Cenvat credit on inputs/raw materials due to non-manufacturing activity.The judgment by the Appellate Tribunal CESTAT NEW DELHI, delivered by Ms. Archana Wadhwa, addressed the issue of denying Cenvat credit on duty paid inputs/raw materials when the appellant engaged in activities like cutting HR/CR coils into sheets or slitting into strips, considered non-manufacturing. The lower authorities had disallowed the credit, arguing that without manufacturing activity, credit couldn't be availed. However, the appellant had paid central excise duty on the final product using the disputed credit. The Tribunal noted that the appellant had discharged duty on the final product, even if no manufacturing occurred, and the duty paid exceeded the Cenvat credit utilized. This led to the reversal of the entire Cenvat credit, creating a revenue-neutral situation. The Tribunal cited the Apex Court decision in Narmada Chematur Pharmaceuticals Ltd. [2005 (179) ELT 276 (SC)] to support their decision, emphasizing that the situation was covered by numerous precedent decisions. Consequently, the impugned orders denying the credit were set aside, and the appeals were allowed, granting relief to the appellant.In this judgment, the Tribunal rejected a request for pass over due to the appellant's representative being late, emphasizing the time constraints and the position of the case on the list. They proceeded to decide the appeal, considering the issue's coverage by multiple precedent decisions. The Tribunal highlighted that the duty paid on the final product exceeded the Cenvat credit availed by the appellant, resulting in a reversal of the entire credit. This action was deemed revenue-neutral and aligned with the principles established in the Narmada Chematur Pharmaceuticals Ltd. case. The decision to set aside the impugned orders and allow the appeals was made based on these considerations, providing consequential relief to the appellant.