2007 (7) TMI 77 - AT - Central Excise

Cenvat/Modvat - Department contended that appellant is not eligible for credit on the ground that the final product(bright bars) was not excisable - Held that department contention was not sustainable and allowed credit to the appellant

Summary

Issues:
- Eligibility for Cenvat credit on inputs for duty paid on final product
- Classification of bright bars as excisable goods

Analysis:

Issue 1: Eligibility for Cenvat credit on inputs for duty paid on final product
The appellants manufactured bright bars and utilized Cenvat credit of duty paid on their input (black bars) for duty payment on the final product. The lower appellate authority denied this credit, stating that the final product was not excisable, hence ineligible for Cenvat credit. The appellants argued that Cenvat credit on inputs and capital goods is available for utilization in duty payment on the final product, citing a Tribunal decision in Syndet India case. The Revenue contended that the conversion of black bars into bright bars did not amount to manufacture, referring to a Supreme Court decision in Vee Kayan Industries case. However, the appellants pointed out that the CBEC had clarified that bright bars are excisable goods, supported by Circular No. 720/36/2003-CX and a Trade Notice.

Issue 2: Classification of bright bars as excisable goods
The Tribunal noted that the issue in this case is covered against the Revenue by the Tribunal's decision in the Syndet India case, where it was held that even if duty was not payable on the finished goods due to no manufacture, the utilization of credit towards duty payment precludes further recovery. This decision, dated 9-12-2003, was accepted by the Revenue previously. Therefore, the Tribunal concluded that at this stage, the Revenue cannot deny the Cenvat credit to the appellants. Consequently, the impugned order was set aside, and the appeal was allowed.

This judgment clarifies the eligibility of Cenvat credit on inputs for duty paid on the final product and establishes the classification of bright bars as excisable goods based on relevant legal precedents and circulars.