Tribunal rules cutting process not manufacturing, allows CENVAT Credit

The Central Excise & Service Tax Appellate Tribunal, Kolkata, decided in favor of the appellant, setting aside the demand raised by the Commissioner, rendering the show cause notice redundant. The Tribunal allowed the appeals, stating that the cutting/slitting process did not amount to manufacture. In the second issue, the Tribunal ruled in favor of the Respondent, allowing them to take CENVAT Credit on the impugned goods based on settled case law. The Revenue's arguments were dismissed, and the Appeal was rejected, with parties bearing their own costs.

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Issues involved:
1. Disallowance of CENVAT Credit on cutting/slitting of H.R./C.R. coils/sheets into C.R. sheets.
2. Eligibility of the Respondent to take CENVAT Credit on the impugned goods.

Detailed Analysis:
1. The issue of disallowance of CENVAT Credit arose when the Revenue alleged that cutting/slitting of H.R./C.R. coils/sheets into C.R. sheets of required sizes did not amount to manufacture, based on a CBEC Circular. A show cause notice was issued to the Respondent to disallow and recover the credit along with interest and impose a penalty. The Order-in-Original was passed against the Respondent, leading to an appeal. However, the Central Excise & Service Tax Appellate Tribunal, Kolkata, in a related case, decided in favor of the appellant by allowing the appeals and setting aside the demand raised by the Commissioner, rendering the show cause notice redundant. The Respondent appealed against the Order-in-Original on grounds that the cutting/slitting process did not amount to manufacture, and the previous order relied upon by the Adjudicating Authority was under appeal at the High Court.

2. The second issue revolved around the eligibility of the Respondent to take CENVAT Credit on the impugned goods. The Adjudicating Authority ruled in favor of the Respondent, citing various judgments. The issue was settled by referring to a case where the Hon'ble Apex Court held that if the supplier had paid duty and issued valid invoices, the recipient was eligible to take credit. The Tribunal found no merit in the Revenue's arguments and dismissed the appeals, leaving the parties to bear their own costs. The judgment emphasized that the credit cannot be denied at the receiver's end in a revenue-neutral situation. Consequently, the Appeal was rejected based on the settled issue and judgments cited, and the Cross Objection was disposed of accordingly.

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