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2016 (12) TMI 31 - AT - Central ExciseManufacture - the appellant is purchasing semi finished Auto Parts on payment of Excise duty and availing the CENVAT credit. The appellant, on such bought Auto Parts, carrying out certain processes including ancillary and incidental processes such as sizing on fixture, powder coating, inspection, fine boring, deburring, gauging, thickness measurement, dimension inspection, application of rust preventive oil, champering, tapping, welding, drilling, notching, thread cleaning depending on the type of the product, after carrying out aforesaid process they are clearing the same to the manufacturer on payment of Excise duty - whether the denial of CENVAT credit on the ground that the appellant is not carrying out any manufacturing activity, is justified? - Rule 16 of Central Excise Rules. Held that: - From the plain reading of the Rule 16 it can be seen that if the assessee receive duty paid goods in his factory and carries out the various processes they can avail the CENVAT credit on said duty paid goods. The condition is that assessee is required to pay duty on reissue of bought out goods equivalent to the CENVAT credit availed, if the process does not amount to manufacture and if the process is amount to manufacture then the duty as per Section 4 is required to be paid i.e. on the transaction value. In the present case it is the contention of the Revenue that the appellant is not carrying out any manufacturing activity. Therefore the appellant is required to pay the duty equivalent to the CENVAT amount. However, the fact remains that the appellant has discharged the duty on the transaction value of on the processed goods, which is more than credit availed. Therefore in such fact the appellant is entitled for credit under the provision of Rule 16. We also take a note that the appellant has paid excise duty on the process component more than the amount of CENVAT credit of brought out goods. Therefore under these circumstances no demands exist, As per the above discussion, we are of the considered view that the appellant has rightly availed the CENVAT credit in respect of semi finished bought out components. CENVAT credit allowed - appeal allowed - decided in favor of appellant-assessee.
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