Tribunal allows appeal for cenvat credit on central excise duty for manufacturing PU foam.

The Tribunal allowed the appeal in favor of the appellant, a central excise registered unit, regarding the eligibility to avail cenvat credit on central excise duty paid for P.U. foam blocks used in manufacturing P.U. foam sheets. The Tribunal held that the appellant's activity constituted manufacturing as they paid duty on the final products, leading to a valid cenvat credit claim. The Tribunal emphasized that denying credit based on the absence of manufacturing activity was unjustified, citing supportive court decisions. The impugned order was set aside, ruling in favor of the appellant.

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Issues involved:
Whether the appellant is eligible to avail cenvat credit of central excise duty paid on P.U. foam blocks used as inputs for their final product described as P.U. foam sheet.

Analysis:
The appeal was filed against an Order-in-Appeal where the appellant, a central excise registered unit, manufactured P.U. form sheets and availed cenvat credit. The lower authorities contended that the appellant's activity did not amount to manufacturing, leading to a show cause notice for demand confirmation, interest, and penalty imposition. The adjudicating authority upheld the demand and penalty. The appellant appealed, but the first appellate authority rejected it. The appellant argued that they paid central excise duty on the articles manufactured from P.U. foam blocks, making cenvat credit valid. They cited court decisions supporting their position. The departmental representative argued that cutting P.U. foam blocks did not constitute manufacturing, referring to relevant court decisions.

The Tribunal considered the submissions and records, focusing on whether the appellant could claim cenvat credit on central excise duty paid for P.U. foam blocks used in manufacturing P.U. foam sheets. It was noted that the appellant procured P.U. foam blocks on which duty was paid and classified the final products under a different heading after manufacturing. The classification remained unchanged throughout the proceedings, indicating a transformation of the original input. The Tribunal concluded that since the appellant paid duty on the final products and the Revenue accepted it, the appellant was entitled to cenvat credit, in line with established law.

The Tribunal agreed with the appellant's reliance on court decisions supporting their position, emphasizing that once an assessee considers an activity as manufacturing and pays duty accordingly, denying cenvat credit on the basis of no manufacturing activity is unfounded. The Tribunal found the judgments cited by the departmental representative less persuasive compared to those supporting the appellant's case. Consequently, the impugned order was deemed unsustainable and set aside, allowing the appeal in favor of the appellant.

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