Cenvat credit cannot be denied on a technical non-manufacture objection where duty on final products was accepted.

Cenvat credit on duty-paid inputs could not be denied for the period before 01.03.2008 merely because the assessee's process was treated as not amounting to manufacture. The assessee had taken registration, paid excise duty on the finished goods, and the Department had accepted that duty, so a technical objection on manufacture could not be used to disallow input credit. The subsequent amendment treating the process as manufacture also supported utilisation of the credit against duty liability after 01.03.2008. Denial of credit would have defeated the credit scheme and resulted in double taxation, so the credit was allowed.

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Issues: Whether Cenvat credit taken on duty-paid inputs could be denied for the period prior to 01.03.2008 merely because the process undertaken by the assessee was treated as not amounting to manufacture.

Analysis: The assessee had cleared finished goods on payment of excise duty and the Department had accepted such duty. The Tribunal noted that the assessee had acted under a bona fide belief, had taken registration, paid duty, and availed credit on inputs used in the manufacture of finished products. It further held that, once duty had been collected on the final products, the Department could not deny input credit on a technical objection that the process did not amount to manufacture. The subsequent amendment treating the process as manufacture reinforced the position that the credit already taken could be utilised against duty payable after 01.03.2008. The Tribunal followed the earlier view that denial of credit in such circumstances would defeat the object of the credit scheme and amount to double taxation.

Conclusion: The denial of Cenvat credit of Rs. 2,03,462/- was held unsustainable and the credit was allowed to the assessee.

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