CENVAT credit for wire drawing units upheld after retrospective amendment and circular clarified regularisation of input credit treatment.

Retrospective amendment regularised the position of wire drawing units for the relevant period, and the Board's circular clarified that credit taken at the input stage on wire rods, downstream credit on drawn wire, and duty paid on clearance of drawn wire were all intended to be protected. On that basis, reversal of CENVAT credit for inputs used in wire drawing units was not sustainable merely because drawing wire from wire rods was treated as not amounting to manufacture, and the demand was set aside in favour of the assessee. The Tribunal also followed its earlier view on the same issue.

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Issues: Whether CENVAT credit taken on inputs used in wire drawing units during the relevant period was liable to reversal on the footing that drawing wire from wire rods did not amount to manufacture.

Analysis: The dispute turned on the effect of the retrospective amendment brought in to regularise the position of wire drawing units for the relevant period. The Board's circular clarified that the amendment was intended to regularise credit taken at the input stage on wire rods, the credit taken by downstream users of drawn wire, and the amount paid at the stage of clearance of drawn wire. In light of that clarification, the demand raised on the appellant could not be sustained. The Tribunal also followed its earlier view taken on the same issue.

Conclusion: The demand for reversal of CENVAT credit was not sustainable and the impugned order was set aside in favour of the assessee.

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