2017 (4) TMI 85 - AT - Central Excise

Tribunal upholds decision in favor of respondent, emphasizes need for clear evidence in excise matters

The tribunal dismissed the Revenue's appeal, upholding the decision of the Commissioner (Appeals) in favor of the respondent. It was found that the GI ... CENVAT credit - Revenue entertained a view that the process undertaken by the respondent in producing G.I. Wires does not amount to manufacture in terms of Rule 2(f) of the CER, 1944, accordingly, the Cenvat credit availed on H.B. Wire, Zinc, Furnace Oil and Hydrochloride Acid used for producing G.I. Wires appear to be incorrect and recoverable - Held that: - the Adjudicating Authority has not substantiated the charge that the said quantity of GI Wires has been put to only process of galvanisation. It was recorded that the said quantity of GI Wires has been captively used in the manufacture of stay wire and barbed wire, which have been cleared on payment of duty - there is no substantial ground in the present appeal by Revenue to rebut the findings recorded in the impugned order - appeal dismissed - decided against Revenue. Issues:1. Interpretation of the term 'manufacture' under Rule 2(f) of the Central Excise Rules, 1944.2. Validity of Cenvat credit availed on raw materials for manufacturing G.I. Wires.3. Discrepancy in the process undertaken by the respondent for producing G.I. Wires.4. Appeal against the Commissioner (Appeals) decision regarding demand and penalty imposed by the Revenue.Analysis:1. The main issue in this case revolves around the interpretation of the term 'manufacture' under Rule 2(f) of the Central Excise Rules, 1944. The Revenue contended that the process undertaken by the respondent in producing G.I. Wires does not amount to manufacture, leading to the incorrect availing of Cenvat credit on raw materials. The dispute arose regarding the eligibility of Cenvat credit on H.B. Wire, Zinc, Furnace Oil, and Hydrochloride Acid used in the manufacturing process.2. The Revenue, aggrieved by the Commissioner (Appeals) decision setting aside the demand and penalty, argued that there was no evidence supporting that the 683.584 Mts. of GI Wires cleared by the respondent underwent a manufacturing process. The Revenue claimed that the respondent failed to provide proper documentary evidence to substantiate their case, and the denial of credit was based on a pro rata calculation.3. Upon reviewing the impugned order, it was found that the disputed quantity of GI Wire was used for captive consumption by the respondent in the production of stay wire and barbed wire, which were final products cleared on duty payment. The Adjudicating Authority failed to prove that the GI Wires were solely subjected to galvanization. The appellate tribunal concluded that the GI Wires were indeed used in the manufacturing process of final products, and there was no substantial ground for the Revenue to challenge the findings of the impugned order.4. Ultimately, the tribunal dismissed the Revenue's appeal, upholding the decision of the Commissioner (Appeals) in favor of the respondent. The judgment highlighted the importance of providing clear evidence to support claims in excise matters and emphasized the need for proper documentation to substantiate credit availed on raw materials used in manufacturing processes.This detailed analysis of the judgment addresses the key issues raised in the case, focusing on the interpretation of relevant legal provisions and the evidentiary requirements in excise matters.