Tribunal allows Cenvat credit for wire drawing despite not constituting 'manufacture'

The Tribunal upheld the Commissioner (Appeals) decision to allow Cenvat credit on inputs for wire drawing activity, citing duty paid on the final product as sufficient compliance despite wire drawing not constituting "manufacture." The Tribunal referenced a CBEC Circular permitting retroactive credit regularization, aligning with precedents and rejecting Revenue's appeal.

---

---

Issues:
Appeal against Order-in-Appeal No. 164/C.E./DLH/2004 dated 14-12-2004 regarding availing of Cenvat credit on inputs for wire drawing activity.

Analysis:
The appeal was filed by Revenue challenging the availing of Cenvat credit on inputs for wire drawing activity by the respondents. The issue revolved around whether wire drawing amounts to "manufacture" as per the Apex Court judgment in the case of Technoweld Industries. The respondents contended that they cleared the final product by paying duty on value addition, not disputed by Revenue. The Commissioner (Appeals) relied on the Tribunal's decision in PSL Holdings Ltd. v. CCE and a Board's Circular to set aside the order-in-original.

The Revenue argued that as per the Apex Court judgment in Technoweld Industries, wire drawing does not constitute manufacture, making Cenvat credit on inputs ineligible as per Rule 6(1) of Cenvat Credit Rules, 2002. The Revenue sought to restore the order of the adjudicating authority, emphasizing that the period in question falls within the scope of the Apex Court judgment.

The respondents, however, pointed out that the duty was paid on the final product despite not being taxable, and referred to a Board's Circular amending Rule 16 retrospectively to allow credit for wire drawing units. They also cited the judgment of a Co-ordinate Bench in Venus Wire Industries Pvt. Ltd. v. CCE, Raigad to support their position.

Upon considering the arguments from both sides and examining the records, the Tribunal noted that the demand for duty was related to Cenvat credit on inputs for wire drawing. The Tribunal agreed with the Commissioner (Appeals) that disallowing the Cenvat credit was not legally justified. The Tribunal highlighted that the duty paid on the final product effectively reversed the Cenvat credit taken, aligning with the precedent set by the Tribunal in Venus Wire Industries. Additionally, the Tribunal referenced a CBEC Circular from 2006, which allowed for the regularization of credits on inputs and duty paid on wires drawn through retrospective amendments, specifically applying para 4.4 of the Circular to the case. Consequently, the Tribunal found no merit in the Revenue's appeal and rejected it, also disposing of the Cross Objection filed by the assessee in support of the impugned order.

---