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TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 798
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....y of CENVAT Credit under the Cenvat Credit Rules, 2004. 2.1 During the scrutiny of ER-1 Returns for the period December 2014 to March 2016 and April 2016 to June 2017, the Department observed that the Respondent after polishing and pasting paper or adhesive plastic film on S.S. Sheets/Coils, were clearing the same on payment of central excise duty. It was further observed by the Department that the Respondent were also availing CENVAT Credit of duty paid on raw materials such as S.S. Sheets/Coils. As per the Department since no new product emerged from the process undertaken by the Respondent, no manufacture had taken place and therefore CENVAT Credit availed was not admissible. 2.2 Consequently, two Show Cause Notices ('SCNs') dated 03.01.2017 and 06.03.2018 were issued to the Respondent for the period December 2014 to March 2016 and April 2016 to June 2017 respectively, demanding recovery of the CENVAT Credit cumulatively amounting to Rs.4,72,60,648/- along with applicable interest and penalties. 2.3 The Respondent filed detailed reply to the said SCNs and submitted that: (a) the process undertaken by the Respondent resulted in a commercially new product having distinct ....
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....redit to the government exchequer. 4.3 She further submits that as per the statutory provisions, it is clear that where the processes undertaken by an assessee does not amount to manufacture, the assessee is not eligible to avail the CENVAT Credit and is not required to pay duty. She further submits that the learned Commissioner has held that the process undertaken by the assessee does not amount to manufacture and therefore, CENVAT Credit of duty paid on material i.e. steel coil/sheet/packing material and capital goods are not available by virtue of Rule 2(k), Rule 2(l) and Rule 3 of the Cenvat Credit Rules, 2004. 4.4 She further submits that the Respondent had wrongly availed the CENVAT Credit on raw materials, capital goods and input services as their final product was not amounting to manufacture and hence not dutiable. 5. On the other hand, the learned Counsel for the Respondent justifies the impugned order. He submits that the amount of duty paid by the Respondent on their final product namely S.S. Sheets/Coils (satin finish no.4 or mirror finish no.8 and PVD coated) exceeds the CENVAT Credit availed on raw materials, effectively resulting in an over-payment more tha....
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....es not amount to manufacture and hence not dutiable. Further, as per the Department, the Respondent have contravened the provisions of Rule 9 of the Cenvat Credit Rules, 2004. Further, as per the Department, the Respondent were purchasing the raw materials i.e. S.S. Sheets/Coils under Tariff Item 72199013 of the Central Excise Tariff Act, 1985 and after polishing and coating the paper or PVD coating thereto, they were clearing the S.S. Sheets/Coils under the same Tariff Item i.e. 72199013 and therefore, no new product with distinct name, characteristics and use had emerged out of the processes carried out by the Respondent, and hence, the Respondent were not manufacturing any final product and not entitled to avail the CENVAT Credit and the CENVAT Credit availed by them is inadmissible. 7. Further, we find that it is a fact that the Respondent have undertaken the processes and after the said processes, the final product namely S.S. Sheets/Coils which were satin finish no.4 or mirror finish no.8 and PVD coated, resulted in a commercially new product having different characteristics and use. Further, we find that in the Respondent's own case for the earlier period, the learned Com....
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....final product was not amounting to manufacture & hence not dutiable. Therefore, it is proposed in the present SCNs that the inadmissible Cenvat Credit taken by the Noticee amounting to Rs.2,29,38,046/- and Rs.2,43,22,602/-respectively, is required to be disallowed, demanded and recovered from them under Rule 14 of Cenvat Credit Rules, 2004 read with Rule 11A(1) of the Central Excise Rules, 2002. 11.1 On the contrary, the Assessee has mainly argued that it is not in dispute that they paid Central Excise duty at the time of clearance of their final products i.e. Satin Finish No. 4 Stainless Steel and the Mirror Finish No. 8 Stainless Steel. Accordingly, they are entitled to credit of Rs. 2,29,38,046/ and Rs. 2,43,22,602/ respectively, pertaining to Central Excise duty paid on 2b Stainless Steel Sheets and Coils and other inputs used in the process, input services and capital goods used in the manufacture of finished goods. Even if it is assumed for the sake of argument that the process in question does not amount to manufacture, the impugned Cenvat credit cannot be denied to them as they have paid Central Excise duty on the goods which have allegedly not resulted from a proc....
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....resent SCNs, is no more res-integra. It has been consistently held by the judicial fora that once duty is paid treating the activity as a manufacturing activity, Cenvat credit is available and duty paid at the time of clearance is to be treated as reversal of credit and a manufacturer cannot be asked once again to reverse the credit so availed. * * * * 11.4 Looking to the facts and circumstances of the case it remains undisputed facts on record that during the material period the Assessee were availing the benefit of the Cenvat credit of duty paid on the input/input services/capital goods and were paying the duty of excise on their final product. As such the credit availed by them was being utilized for payment of duty. By adopting such an exercise, the credit availed by the Assessee is reversed by way of utilizing the same for payment of duty on their final product which they were not required to pay. In these circumstances, in my views, the Cenvat credit availed by the Assessee and utilized by them for the purpose for which the same was not required to be utilized, already stands reversed by them. As such, they cannot be asked to once again reverse the credit so availed.....