2015 (1) TMI 499 - AT - Central Excise

Tribunal grants Cenvat credit on conversion process, setting aside denial and providing consequential relief.

The Tribunal allowed the appeal, holding that the denial of Cenvat credit on the ground that the conversion process did not amount to manufacture was ... Denial of CENVAT Credit - Nexus with maufacturing activity - activity of conversion of rods and rounds - Held that:- Following decision of R.B. Steel Services and others vs. CCE, Rohtak [2015 (1) TMI 292 - CESTAT NEW DELHI] - after dispensing with the condition of pre-deposit of duty and penalty, set aside the impugned order itself - Decided in favour of assesse. Issues:Denial of Cenvat credit on the ground of conversion of rods and rounds not amounting to manufacture.Analysis:The appellants were denied Cenvat credit of Rs. 2,48,80,202 for duty paid on their final product 'bright bars' due to the contention that the conversion process did not constitute manufacturing. However, the Tribunal found no justification for the denial of credit, especially since the duty liability was discharged after availing the credit. The Tribunal referred to a previous decision in the case of R.B. Steel Services, establishing that the issue had already been settled. The Tribunal cited legal precedents, including the Supreme Court's ruling in Vee Kayan Industries case, to support the position that the conversion process did not amount to manufacture. Additionally, the Tribunal highlighted cases where Cenvat credit was allowed even when the process did not qualify as manufacturing, emphasizing that duty payment on the final product justified credit availing.The Tribunal emphasized that the issue was no longer res integra based on previous rulings, such as the Ajinkya Enterprises case affirmed by the Bombay High Court. Consequently, the Tribunal held that the appellant was entitled to Cenvat credit. The impugned order was set aside, and the appeal was allowed with consequential relief. The Tribunal further clarified that the appellants were entitled to Cenvat credit, and the impugned order was overturned, allowing the appeal with necessary relief. The issue having been conclusively decided, the Tribunal dispensed with the pre-deposit condition for duty and penalty, setting aside the impugned order and granting the appeal with consequential relief to the appellants. The stay petition and appeal were disposed of accordingly.