2017 (9) TMI 451 - AT - Central Excise

Tribunal upholds Cenvat credit for manufacturing despite Revenue challenge. Importance of duty payment emphasized.

The Tribunal upheld the Commissioner (Appeals)' decision to allow Cenvat credit to the respondents, despite the Revenue's challenge on the manufacturing ... CENVAT credit - revenue argued that the appellants are not involved in the manufacturing activities - Held that: - it is a fact that the appellants have availed Cenvat Credit and paid the Central Excise duty and exported goods and also claimed rebate on the exported goods. Revenue has not challenged the payment of duty on the exported goods and also not challenged sanction of rebate claims sanctioned to the appellants. In these circumstances, the decision of the Tribunal in the case of Hino Motors Sales India Pvt. Ltd. [2013 (8) TMI 844 - CESTAT MUMBAI] becomes relevant, where it was held that The Cenvat Credit availed cannot be demanded in spite of the fact that the activity undertaken by the appellant does not amount to manufacture. In the present case there is no dispute that the duty on the final product has been paid by the appellants by utilizing the Cenvat credit being demanded and department has not disputed payment of duty on vehicles, the Cenvat credit availed cannot be demanded in spite of the fact that the activity undertaken by the appellant does not amount to manufacture. Appeal dismissed - decided against Revenue. Issues:1. Denial of Cenvat credit by adjudicating authority2. Commissioner (Appeals) allowing credit to respondents3. Manufacturing activities of the appellants4. Applicability of Notification No.214/86 and Rule 4 (5) of Cenvat Credit Rules, 20045. Challenge by Revenue on manufacturing activities6. Export of goods and rebate claims7. Tribunal's decision in the case of Hino Motors Sales India Pvt. Ltd.8. Utilization of Cenvat credit for payment of duty on final productsAnalysis:1. The appeal was filed by the Revenue challenging the denial of Cenvat credit to the respondents by the adjudicating authority. The Commissioner (Appeals) had allowed the credit to the respondents, leading to the Revenue's appeal before the Tribunal.2. The Revenue argued that the appellants were not engaged in manufacturing activities, citing the lack of machinery and evidence of manufacturing at the premises during investigations. The Revenue contended that since the respondents were not conducting manufacturing activities, they should not be entitled to Cenvat Credit as per Notification No.214/86 and Rule 4 (5) of Cenvat Credit Rules, 2004.3. The respondents, on the other hand, pointed out that all their activities were known to Central Excise Officers, and they were exporting all their products following proper procedures. They highlighted that the Revenue had not challenged the duty payment on exported goods or the rebates granted, indicating the correctness of duty payments on finished goods.4. The Tribunal, after considering both sides, noted that while the Revenue disputed the manufacturing activities of the respondents, the fact remained that the appellants had availed Cenvat Credit, paid Central Excise duty, exported goods, and claimed rebates without any challenge from the Revenue. The Tribunal referenced a previous case, Hino Motors Sales India Pvt. Ltd., where Cenvat credit was allowed even when activities did not amount to manufacturing, emphasizing the importance of duty payment on final products.5. Citing the decision of the Hon'ble High Court of Bombay in a relevant case, the Tribunal concluded that since duty on final products had been paid by utilizing Cenvat credit and not disputed by the Revenue, the credit availed could not be demanded, despite the nature of activities not constituting manufacturing. Therefore, the impugned order was upheld, and the appeal was dismissed.