CENVAT credit on re-rollable inputs cannot be denied merely because the Department prefers a different tariff classification.

CENVAT credit on inputs used for manufacture of rolled products was held admissible where the goods were capable of re-rolling in the appellant's factory and the final products had suffered duty. The Tribunal followed its earlier decision in the appellant's own case and held that credit could not be denied merely because the Department treated the inputs as scrap under Heading 7204 or preferred a different tariff classification. On that basis, the denial of credit, interest, and penalty was unsustainable, and the impugned order was set aside.

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Issues: Whether CENVAT credit was admissible on goods received as inputs for manufacture of rolled products, where the Department treated them as scrap classifiable under Heading 7204 and denied credit.

Analysis: The inputs had been procured for use in the manufacture of rolled products and were stated to be capable of re-rolling in the appellant's factory. The dispute was identical to an earlier period in the appellant's own case, where credit had already been allowed. Following that earlier decision, the Tribunal held that once the final products had suffered duty and the inputs were eligible under the CENVAT Credit Rules, the credit could not be denied merely on the basis of the Department's view on classification. The Tribunal therefore did not go into the classification issue in detail.

Conclusion: CENVAT credit was admissible to the appellant and the denial of credit, interest, and penalty could not be sustained.

Final Conclusion: The appeal succeeded and the impugned order was set aside.

Ratio Decidendi: Where duty has been paid on the final products and the inputs are capable of use in manufacture, CENVAT credit cannot be denied merely because the Department prefers a different tariff classification of those inputs.

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