Tribunal Rules Cenvat Credit Valid on Non-Manufacturing Processes if Final Product Duty Accepted by Department.

The Tribunal allowed the appeal, setting aside the impugned order, by affirming that cenvat credit on inputs used in the manufacturing process need not be reversed if the final product's duty is accepted by the department, even if the process does not constitute manufacturing. This decision relied on established legal principles from previous rulings by the Bombay HC and Gujarat HC, which supported the appellant's position against the Revenue's dispute over the admissibility of cenvat credit.

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Issues involved:
The issues involved in the judgment are related to the admissibility of cenvat credit on imported/locally procured inputs used in the manufacturing process and the subsequent clearance of goods 'as such' by the appellant, which the Revenue disputed as not amounting to a process of manufacture.

Details of the Judgment:

Issue 1: Admissibility of cenvat credit on inputs used in manufacturing process
The appellant, engaged in manufacturing high precision tools, imported certain parts as inputs and availed cenvat credit on them as per Cenvat Credit Rules, 2004. The Revenue disputed the processes undertaken by the appellant, alleging that they do not result in the manufacture of a new item different from the inputs. The appellant contended that the duty paid on inputs cleared 'as such' is higher than the credit availed, citing previous tribunal and high court judgments supporting their position. The Tribunal noted that the issue has been settled by previous decisions, including the Bombay High Court and Gujarat High Court rulings, which held that once duty on final products is accepted by the department, cenvat credit need not be reversed even if the activity does not amount to manufacture. The Tribunal found no merit in the impugned order and allowed the appeal based on the settled legal principles.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeal, citing the settled legal principle that cenvat credit availed on inputs used in the manufacturing process, even if the activity does not amount to manufacture, does not need to be reversed once duty on final products is accepted by the department.

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