Cenvat credit on duty-paid inputs sustained where final clearances were also dutiable and the dispute was revenue neutral.

Cenvat credit was held admissible where duty had been paid on the inputs, credit had been taken, and duty was again discharged on clearance of the processed cables. The Tribunal noted that the department could not collect central excise duty on the final clearances and simultaneously deny credit on the ground that the activity did not amount to manufacture. It also referred to Rule 57AB(1C) of the Central Excise Rules, 1944, which required payment of an amount equal to duty where inputs are removed as such. The overall position was treated as revenue neutral, and the Revenue's appeal was rejected, sustaining the assessee's credit entitlement.

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Issues: Whether Cenvat credit was admissible to the assessee where duty had been paid on the inputs, duty was also discharged on clearance of the processed cables, and the department contended that the activity undertaken did not amount to manufacture.

Analysis: The inputs were procured on payment of duty and credit was admittedly taken. The cleared goods were again subjected to duty on removal from the factory. In such a situation, the department could not simultaneously levy and collect central excise duty on the clearances and deny credit on the ground that manufacture had not taken place. The Tribunal also found support in Rule 57AB(1C) of the Central Excise Rules, 1944, under which, where inputs are removed as such, the manufacturer is required to pay an amount equal to the duty leviable on such goods. On either view, the situation was revenue neutral.

Conclusion: The appeal of the Revenue was rejected and the assessee's entitlement to credit was sustained.

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