CENVAT credit on S.S. wire upheld after later circular and notification treated unit payments as duty

CENVAT credit on S.S. wire purchased from a wire drawing unit could not be denied for clearances made between June 2003 and October 2003. An earlier circular had taken the view that buyers of S.S. wire were not entitled to credit, but a later circular and notification clarified that the amount paid by the wire drawing unit would be treated as duty and that credit to the buyer could not be refused for clearances up to 8.7.2004. On that basis, the denial of credit was unsustainable and the Revenue's appeal failed.

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Issues: Whether CENVAT credit on S.S. wires purchased as input from a wire drawing unit could be denied for the period June 2003 to October 2003.

Analysis: The input was drawn from wire rods by a unit which was initially treated as not liable to pay duty, and an earlier circular had stated that buyers of S.S. wire were not entitled to credit. That position was later clarified by a subsequent circular and by a later notification, both recognising that the amount paid by the wire drawing unit would be treated as duty and that credit to the buyer could not be denied for clearances up to 8.7.2004. In view of these clarifications, the issue was treated as settled.

Conclusion: CENVAT credit could not be denied and the Revenue's appeal failed.

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