Cenvat credit cannot be denied where final product duty is accepted, even if the process is not manufacture.

Cenvat credit on inputs cannot be denied solely because the processing of black steel bars into steel bright bars is treated as not amounting to manufacture, where duty on the final products has been accepted. The Tribunal relied on an earlier decision on the same issue and the Board notification considered by the lower authority, and held that these authorities supported allowance of credit. The appellate order permitting Cenvat credit was therefore affirmed and the Revenue's appeal failed.

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Issues: Whether Cenvat credit on inputs could be denied merely because the processing of steel bright bars from black steel bars was held not to amount to manufacture, when duty on the final products had been accepted.

Analysis: The dispute turned on the effect of earlier decisions and the Board notification relied upon by the lower authority. The Tribunal noted that in an earlier decision on the same issue, credit had been allowed where duty on the final products was accepted, on the principle that credit cannot be denied only because the activity is treated as not amounting to manufacture. That view supported the respondent's claim and removed any basis to interfere with the appellate order.

Conclusion: The denial of Cenvat credit was not justified, and the issue was decided in favour of the respondent.

Final Conclusion: The appellate order allowing Cenvat credit was affirmed and the Revenue's appeal failed.

Ratio Decidendi: Where duty on the final products is accepted, Cenvat credit on inputs cannot be denied solely on the ground that the process undertaken does not amount to manufacture.

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