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2014 (9) TMI 974 - CESTAT NEW DELHIDenial of CENVAT Credit - Whether Cenvat credit on inputs can be allowed to be availed and further passed on to the buyers despite activity of slitting and pickling of CR coils undertaken does not amount to manufacture - Difference of opinion - Majority order - Held that:- The appellant’s main raw material is duty paid H.R. Coils, which are used by them for manufacture of C.R. Coils/strips, G.P. coil/sheet, PPGI Coated Coils, G.C. Sheets, etc. Some quantity of H.R. Coils in respect of Cenvat credit has been taken, are subjected to the process of slitting and pickling and such slitted and pickled sheets are sold. There is no dispute that the appellant had cleared such slitted and pickled sheets on payment of duty at the applicable rate on the transaction value, and as such duty paid on the slitted/pickled H.R. Sheets is ₹ 43,43,87,669/- as against the Cenvat credit of ₹ 37,03,91,917/- taken in respect of the H.R. Coils used. Moreover, when the Department’s case is that the process undertaken by the appellant does not amount to manufacture, it amounts to saying that the appellant have cleared the Cenvat credit availed inputs as such and this is something which is not prohibited, if at the time of removal of Cenvat credit availed inputs, in terms of the provisions of Rule 3(5) of the Cenvat Credit Rules, 2004, an amount equal to the Cenvat credit availed is paid under an invoice issued under Rule 9 of the Central Excise Rules, 2002. There is no dispute that the amount paid by the appellant is more than the Cenvat credit availed. In my view, therefore, the assessee should not be penalized for paying more amount than their actual duty liability. Since Rule 3(5) itself requires that removal of cenvated inputs as such on payment of an amount equal to the Cenvat credit availed has to be under an invoice issued under Rule 9 of the Central Excise Rules, 2002 and since in terms of the Rule 9(1) of the Cenvat Credit Rules, 2004, an invoice issued by a manufacturer under Rule 9 even for removal of cenvated inputs/capital goods as such is a valid document for availing Cenvat credit, the appellant’s customer could avail Cenvat credit on the basis of the invoices for pickled sheets issued by the appellant and as such, there is no illegality in the appellant’s passing on the Cenvat credit. Since the amount paid on the clearance of pickled H.R. sheets is more than the Cenvat credit availed, the Cenvat credit availed stands more than reversed and there is no need to recover the same again. It is also seen that this issue stands decided in favour of the appellant by the Tribunal in the case of Ajinkya Enterprises (2013 (6) TMI 610 - CESTAT MUMBAI) and this judgment of the Tribunal has been upheld by the Bombay High Court vide judgment reported in [2012 (7) TMI 141 - BOMBAY HIGH COURT]. - impugned order is set aside - Decided in favour of assessee.
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