Input credit not deniable on the ground that process undertaken by the assessee does not amounts to manufacture.

PJ/ Case Law/2013-14/1625

Case:- M/s ANUTONE ACOUSTICS LTD Vs COMMISSIONER OF CENTRAL EXCISE, THANE-I

Citation:- 2013-TIOL-984-CESTAT-DEL

Brief facts:- The appellants are in appeal against the impugned order demanding duty interest and penalty by denying the input credit on the inputs secured by them during the period October, 2006 to March 2009 on the premises that activity undertaken by the appellant does not amount to manufacture. A redemption fine of Rs. 94 lakhs was also imposed.

Appellants contention:- The appellant submits that he has applied for registration in the month of August, 2006. On his application a query was raised by the jurisdictional Dy. Commissioner of Central Excise, the same was replied and after visit of the factory of the appellant of the premises by the concerned officer and understanding the activity undertaken by the appellant, the registration was granted and after granting the registration they procured the inputs and took credit and clear their final product on payment of duty. Therefore, it is the contention of the revenue that activity does not amount to manufacture, they have already paid the duty on their final product and same may be treated as reversal the Cenvat Credit availed by them on the inputs as held by this Tribunal in the case of Ajinkya Enterprises vs. Commissioner of Central Excise, Pune-II reported in 2013 (288) E.L.T. 247 (Tri-Mumbai) (2011-TIOL-1333-CESTAT-MUM).

Respondents Contention:-On the other hand the Respondent opposed the contention of the appellant and submitted that the activity of cutting and packing undertaken by the appellant does not amount to manufacture and at the time of visit there was no activity being undertaken by them. Therefore, the appellant has misrepresented to the department for seeking registration.

Reasoning of Judgement:- Considering the submission made by both the sides, the Hon’ble CESTAT find that after explaining the process that is to be undertaken by the appellant, the registration was granted and appellant was procuring inputs on payment of duty and credit of the same has been taken by them. After doing process, the appellants are clearing the goods on payment of duty. During the period October, 2006 to March, 2009 no audit was taken place at the premises of the appellant whether the activity amounts to manufacture or not when the registration has been granted to the appellant. Therefore, the appellants are entitled for input credit on the inputs and at the same time we also find that appellants are clearing finished goods on payment of duty. In this case, admittedly Show Cause Notice has been issued by invoking the extended period of limitation. As the activity undertaken by the appellant was in the knowledge of the department, the extended period of limitation is not invokable. Further, we find that as per the decision of this Tribunal in the case of Ajinkya Enterprises (supra) wherein this Tribunal held that although the activity undertaken by the appellant does not amount to manufacture but when they have cleared their finished product on payment of duty, the same may be treated as reversal of Cenvat Credit availed on inputs. With this observation the Hon’ble CESTAT hold that appellants are not required to reverse the Cenvat Credit as they have already paid duty on their clearances and also hold that the appellants are having a strong case of limitation also. Therefore, we set aside the impugned order and allow the appeal with consequential relief if any.

Decision:- The appeal is allowed with consequential relief.

Comment:- The crux of the whole case is if an activity does not amount to manufacture but excise duty is paid on clearance of finished goods then Cenvat Credit cannot be denied on the ground that the process does not amounts to manufacture. The clearance of goods on payment of duty itself indicates that the credit has been reversed on the inputs.

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PJ/ Case Law/2013-14/1625

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