Central excise registration and CENVAT credit cannot be denied by adding conditions beyond the statutory scheme.

Registration under the central excise regime cannot be revoked merely because the department disputes whether the premises amount to manufacture; Rule 9(3) permits revocation only for breach of the Act or Rules, and manufacture under Section 2(f) operates within the charging framework of Section 3. The text further states that CENVAT credit on imported inputs cannot be denied or recovered simply by characterising the assessee as an invalid manufacturer or unregistered person, where duty was lawfully discharged and the credit moved through the ordinary excise chain. The overall principle is that tax authorities cannot impose extra-statutory conditions to defeat lawful registration or credit.

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Issues: (i) Whether registration under the central excise law could be revoked on the ground that the appellant's premises did not satisfy the concept of manufacture. (ii) Whether CENVAT credit of duty discharged on imported inputs could be denied and recovered on the basis that the appellant was not a valid manufacturer or registered assessee.

Issue (i): Whether registration under the central excise law could be revoked on the ground that the appellant's premises did not satisfy the concept of manufacture.

Analysis: The power to revoke registration under Rule 9(3) of the Central Excise Rules, 2002 is confined to breach of the Act or the rules. Registration cannot be denied merely because the department disputes the nature of the activity carried on at the premises. The definition of manufacture in Section 2(f) of the Central Excise Act, 1944 is inclusive and operates within the charging framework of Section 3 of that Act. Once duty liability has been discharged on excisable goods and the statutory regime otherwise permits registration, the authorities cannot impose an extra-statutory condition that manufacture must occur only in a particular manner or at a particular stage to justify registration.

Conclusion: The revocation of registration was not valid in law and the finding was against the Revenue.

Issue (ii): Whether CENVAT credit of duty discharged on imported inputs could be denied and recovered on the basis that the appellant was not a valid manufacturer or registered assessee.

Analysis: The credit was taken against duties discharged at the import stage and utilised in the normal course of the excise chain. The fact that the final goods were cleared on payment of duty and exported did not justify denial of credit merely because the department sought to characterise the activity differently. The court relied on the principle that if duty is levied, credit cannot be denied by first negating manufacture in a manner inconsistent with the statutory scheme. The department's approach would amount to retaining duties without legal sanction, despite the goods being within the excise framework and the job-work procedure having been complied with.

Conclusion: Denial and recovery of CENVAT credit were not sustainable and the finding was against the Revenue.

Final Conclusion: The impugned orders could not stand because the statutory conditions for revocation of registration and denial of credit were not made out on the facts found, and the appeals succeeded.

Ratio Decidendi: A statutory tax authority cannot deny registration or CENVAT credit by imposing conditions beyond the charging and regulatory provisions where duty has been lawfully discharged and the activity falls within the inclusive statutory framework of manufacture.

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