2018 (2) TMI 463 - AT - Central Excise

Appellate Tribunal rules removal of inputs by a manufacturer not trading activity

The Appellate Tribunal CESTAT, ALLAHABAD ruled in favor of the appellant in a case concerning the interpretation of Rule 6(3) of the Cenvat Credit Rules, ... CENVAT credit - after availing the benefit of Cenvat credit of duty on the inputs, cleared the inputs as such “as such”, after reversing the credit so availed - Revenue is of the view that such removal of inputs has to be treated as a trading activity so as to make the appellant liable to pay an amount equal to 5%/6% of the value of the goods in terms of the provisions of Rule 6(3) of the CCR 2004 - Held that: - the issue stands covered by the Tribunal decision in the case of Commissioner of Central Excise & Service Tax, Ghaziabad Versus Mahaveer Cylinders Ltd. [2016 (11) TMI 1336 - CESTAT ALLAHABAD] laying down that removal of inputs “as such” by a manufacturer cannot be treated to be a trading activity - appeal allowed - decided in favor of appellant. Issues Involved:Interpretation of Rule 6(3) of the Cenvat Credit Rules, 2004 regarding treatment of removal of inputs 'as such' by a manufacturer.Analysis:1. The main issue in the present appeal before the Appellate Tribunal CESTAT, ALLAHABAD was the interpretation of Rule 6(3) of the Cenvat Credit Rules, 2004. The dispute arose when the appellants, after availing the benefit of Cenvat credit of duty on the inputs, cleared the inputs 'as such' by reversing the credit. The Revenue contended that such removal of inputs should be treated as a trading activity, making the appellant liable to pay a certain amount based on the value of the goods.2. The Tribunal referred to a previous decision in the case of Commissioner of Central Excise & Service Tax, Ghaziabad Versus Mahaveer Cylinders Ltd. The Tribunal decision, reported at 2016 (341) E.L.T. 361 (Tri. Allahabad), established that the removal of inputs 'as such' by a manufacturer cannot be considered a trading activity. This precedent was crucial in determining the outcome of the present appeal.3. Upon careful consideration of the arguments presented by both sides and the legal precedent cited, Mrs. Archana Wadhwa, Member (Judicial), found no merit in the Revenue's stand. Consequently, the impugned orders were set aside, and both appeals were allowed in favor of the appellant. The decision provided consequential relief to the appellant, emphasizing the importance of the Tribunal's interpretation and application of the relevant legal provisions.In conclusion, the judgment by the Appellate Tribunal CESTAT, ALLAHABAD clarified the treatment of removal of inputs 'as such' by a manufacturer under Rule 6(3) of the Cenvat Credit Rules, 2004. The decision reaffirmed the position that such removal cannot be categorized as a trading activity, aligning with established legal precedents and providing relief to the appellant in this case.