Tribunal grants cenvat credit to appellant for wire manufacturing activity

The Tribunal allowed the appeal in favor of the appellant, setting aside the impugned order. It held that the appellant, engaged in drawing wires from wire rods during the disputed period, was entitled to cenvat credit as the activity constituted manufacturing. The Tribunal emphasized that the denial of credit based on a changed circular was erroneous, and a retrospective amendment rectified this, allowing credit if duty liability was discharged. Consequently, the appellant, having cleared final products and paid duty, was granted cenvat credit for the relevant period.

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Issues:
Waiver of pre-deposit of confirmed amounts for ineligible cenvat credit due to manufacturing activity of drawing wires from wire rods.

Analysis:
The stay petition sought the waiver of pre-deposit for the amounts confirmed as ineligible cenvat credit due to the appellant's activity of drawing wires from wire rods, contending they were not engaged in manufacturing any items. The Tribunal, after hearing both sides, decided to dispose of the appeal immediately, as the issue was narrow. The appellant's counsel highlighted that during the period in question (April 2001 to November 2003), the appellant considered the drawn copper wires as final products, manufacturing them from copper rods and availing cenvat credit. The adjudicating authority, however, deemed the activity not amounting to manufacturing, leading to the denial of cenvat credit. The counsel referenced relevant circulars and judicial decisions to support their argument. The Senior Departmental Representative reiterated the lower authorities' findings.

The Tribunal acknowledged that during the disputed period, the appellant was drawing wires from wire rods, a process considered manufacturing activity at that time. The Board's circular from 16.02.01, in force during the material period, deemed wire drawing as manufacturing. The Tribunal emphasized that the lower authorities erred in denying cenvat credit based on the changed circular of 29.05.03, which withdrew the earlier stance. The retrospective amendment via Section 89 of the Finance (2) Act, 2004, rectified this, allowing cenvat credit for the relevant period if duty liability was discharged. The Tribunal held that the appellant, having cleared the final products and paid duty, was entitled to cenvat credit during the material period, settling the issue in favor of the assessee.

Therefore, the Tribunal set aside the impugned order, allowing the appeal in favor of the appellant.

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