2023 (9) TMI 354 - AT - Central Excise

Credit availment on non-manufactured goods scrutinized by Tribunal, recovery limited to excess credit on specific products.

Rohm & Hass (I) Pvt Ltd Versus Commissioner of Central Excise and Customs, Belapur

Rohm & Hass (I) Pvt Ltd Versus Commissioner of Central Excise and Customs, Belapur - TMI Issues involved:The judgment involves the issue of whether goods cleared domestically and for export between 2007 and 2011 are liable to be charged to excise duty and if the appellant is eligible to avail credit on inputs procured from domestic sources and abroad, as well as credit on input services under rule 3 of CENVAT Credit Rules, 2004.Summary of the Judgment:Issue 1: Manufacture and Excisability of GoodsThe appellant, engaged in re-packing and labeling imported goods, argued that the activity amounts to manufacture and any recovery of duty is beyond the law. They contended that even if no manufacture occurred, the computation is revenue neutral. The Tribunal referred to relevant case laws and held that if goods have not undergone manufacture, the credit availed is not valid. The Tribunal set aside the order and remanded the matter for verification of credit availed on the three products.Issue 2: Adjustment of Credit and ReversalThe appellant argued that any credit taken has been offset at the time of clearance and should be constructively reversed as per rule 3(5) of CENVAT Credit Rules, 2004. The Authorized Representative contended that no manufacture took place, rendering the duty collection unlawful. They emphasized the need for fresh verification of the credit details. The Tribunal referred to previous judgments and emphasized that recovery of credit on non-manufactured goods is unnecessary.Issue 3: Legal Precedents and Recovery of CreditThe Tribunal considered various legal precedents cited by both parties, including decisions from the High Courts and Supreme Court. It was noted that the utilization of credit for cleared products is equivalent to reversal, making the recovery of such credit redundant. The Tribunal directed the original authority to verify the actual availment and reversal of credit.In conclusion, the Tribunal remanded the matter back to the original authority for verification and instructed to limit any recovery to the credit in excess of that availed on the procurement of the three products.