2016 (10) TMI 1240 - AT - Central Excise

CENVAT Credit - denial of credit on the ground that the process not amounting to manufacture - activity of processing aluminium sheets in coils by reducing the thickness of the same - Held that - Merely the fact that the raw material and the resultant product fall under the same sub heading of the Tariff cannot be a deciding test of manufacture as a sub heading may cover many products - there is mo reason to hold that the activity of reducing the thickness of aluminium sheets by cold rolling which involves process of tempering and annealing does not amount to manufacture - credit allowed - appeal dismissed - decided against Revenue.

Summary

Issues involved: Determination of whether the activity of processing aluminum sheets in coils by reducing their thickness amounts to manufacture under the Cenvat Credit Rules, 2004.

Detailed Analysis:

Issue 1: Manufacture under Cenvat Credit Rules, 2004
The appeals involved the respondent-assessee engaged in processing aluminum sheets in coils by reducing their thickness. The Revenue contended that the processes undertaken did not amount to manufacture, leading to inadmissible cenvat credit on inputs and capital goods. The original authority adjudicating the matter found the proceedings against the respondent-assessee not sustainable.

Analysis: The Tribunal considered the argument put forth by the Revenue that the reduction of thickness of aluminum sheets did not result in a new product and thus did not amount to manufacture. The Revenue relied on Circular No. 584/21/2001-CX, which was subsequently withdrawn. However, the Tribunal noted that the circular was misapplied as it pertained to a different context. The Tribunal emphasized that the physical properties of the aluminum sheets changed during the process of reducing thickness, resulting in a product with different characteristics and uses. Merely falling under the same sub-heading of the Tariff did not preclude the activity from constituting manufacture. The Tribunal concluded that the activity of reducing the thickness of aluminum sheets through cold rolling, involving tempering and annealing, indeed amounted to manufacture.

Final Decision:
The Tribunal, after perusing the impugned order and finding no persuasive arguments from the Revenue to alter the original decision, dismissed the appeals. The judgment was pronounced on 18.10.2016 by the Tribunal comprising Dr. Satish Chandra, J. (President) and B. Ravichandran, Member (T).