2015 (10) TMI 1812 - AT - Central Excise

Appellate Tribunal rules Grey Man Made Fabrics qualify for CENVAT Credit as input, not finished goods

The Appellate Tribunal CESTAT Ahmedabad upheld the decision that CENVAT Credit should be allowed for the declared stock of Grey Man Made Fabrics as input, ... Denial of CENVAT Credit - whether the CENVAT Credit is to be allowed for the declared stock of Grey Man Made Fabrics (by considering it as input) as per Sr.No.1(c) of Table appended to the Notification No.35/2003-CE(NT), dt.10.04.2003 as amended or as per Sr.No.2 (b) (by considering it as finished goods in stock.) - Held that:- Commissioner (Appeals) following the decision of the Tribunal held that the dealer is introduced between the manufacturer and the processor, the nature of product as input cannot undergo any change, and it would cover under Sr.No.(c) of the said notification. - view was approved by the Hon’ble Gujarat High Court in the case of CCE Ahmedabad-I Vs Rajkamal Textile Traders - [2009 (2) TMI 476 - GUJARAT HIGH COURT ], and dismissed the appeal filed by the Revenue - No reason to interfere in the order of the Commissioner (Appeals). - Decided against Revenue. Issues:1. Whether CENVAT Credit should be allowed for the declared stock of Grey Man Made Fabrics as input or finished goods.Analysis:The judgment by the Appellate Tribunal CESTAT Ahmedabad involved the issue of determining whether CENVAT Credit should be allowed for the declared stock of Grey Man Made Fabrics as input or finished goods. The Respondents were engaged in trading Grey Man Made Fabrics classified under Chapter 54 of the Central Excise Tariff Act, 1985. The Adjudicating authority had confirmed the demand for CENVAT Credit along with interest and penalty, considering the stock of Grey MMF as finished goods and not as input/raw material. The Commissioner (Appeals) upheld this decision based on the Tribunal's ruling that the dealer, as an intermediary between the manufacturer and processor, does not change the nature of the product as input, falling under a specific notification. This view was supported by a judgment of the Hon'ble Gujarat High Court in a similar case. The High Court emphasized that the grey fabrics, although finished goods for the manufacturer, are considered inputs for the processor, even if a dealer is involved in the transaction. The Court highlighted that the nature of the product as input does not change due to the presence of a dealer in the supply chain. Therefore, the Tribunal found no reason to interfere with the Commissioner (Appeals) decision, ultimately rejecting the appeal filed by the Revenue.