CENVAT credit remains admissible when duty on the final product is accepted, even if manufacture is later disputed.

Where duty on the final product has been assessed and accepted, CENVAT credit on inputs cannot be denied merely because the department later alleges that the process did not amount to manufacture. The text applies settled precedent that acceptance of duty on clearance of the final product prevents denial or reversal of credit on the ground of absence of manufacture. On that basis, the objection to input credit was rejected and CENVAT credit was treated as admissible.

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Issues: Whether CENVAT credit availed on inputs is admissible when the activity undertaken does not amount to manufacture, but duty has been paid and accepted on the final product.

Analysis: The Tribunal noted that the question was settled by precedent. Where duty on the final product has been assessed and accepted by the department, CENVAT credit on inputs cannot be denied merely because the department later contends that the process did not amount to manufacture. The Tribunal followed the decisions holding that acceptance of duty on clearance of the final product prevents denial or reversal of credit on the ground of absence of manufacture.

Conclusion: CENVAT credit was held admissible and the objection based on absence of manufacture was rejected.

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