TMI Blog2014 (7) TMI 232X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeal No.2793-2794, 2827/2011- Ex(DB) - - - Dated:- 2-4-2014 - Archana Wadhwa and Manmohan Singh, JJ. For the Appellant : Shri B L Narsimhan and Hemant Bajaj, Advs . For the Respondent : Ms Ranjhana Jha, (AR) JUDGEMENT Per: Archana Wadhwa : The Commissioner vide his impugned order has confirmed duty of Rs . 37,03,91,917/- along with imposition of penalty of identical amount by denying them the benefit of Cenvat credit of duty availed on HR coils and sheets which have undergone the process of slitting and pickling by the appellant and are converted into HR slitted and pickled coils. The said demand stand confirmed on the ground that the activity undertaken by the appellant does not amount to manufacture and as such the appellant was not entitled to avail the benefit of Cenvat credit of duty paid on the inputs. 2. Ld. Advocate appearing for the appellant draws our attention to umpteen number of Tribunal's decision laying down that inasmuch as duty was being paid on the final product cleared by the assessee, the entire exercise is Revenue neutral. He submits that though all the above decisions were placed before the adjudicating authority, he has c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iv) The exercise would not be revenue neutral as credit has been erroneously passed on to buyers who would further pass on the credit. 4. In his rejoinder ld. Advocate submits that credit to the buyers is in any case admissible even if it is treated as clearance of the input as such. 5. After hearing the submissions made by both the sides we find that the activities of cutting or slitting of steel sheet in coil has been held as non manufacturing activity by the Hon'ble Delhi High Court in the case of Faridabad Iron Steel Traders Association V/s. Union of India 2004 (178) E.L.T. 1099. There is no quarrel about the above proposition. The appellants were availing the credit of duty paid on the various inputs used in the manufacture of their final product and was utilizing the said Cenvat credit in discharge of duty on their final product. Revenue, on the ground that the said activity does not amount to manufacture, denied the credit of around Rs . 37,03, 91,917/- availed by them during the period 1-2-2007 to 31-10-2009 and utilized, by making debit entries, towards excise duty on their final product. In addition to utilization of the said Modvat credit, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eversal is not required. Similarly in the case of Crompton Greaves Ltd. V/s. CCE, Mumbai-III-2008 (230) E.L.T. 488 (Tri. -Mumbai), it was held that the imported superior parts were not further manufactured upon except repacking which does not amount to manufacture. The clearance of such goods on payment of duty is to be treated as reversal of alleged ineligible credit and the demand made by the lower authorities on the said ground was held as not sustainable. To the similar effect is another decision of the Tribunal in the case of Sona Koyo Steering Systems Ltd. V/s. CCE, Delhi 2007 (5) S.T.R. 15 (Tri.-Del.) and the decision in the case of Hansa Tubes Pvt. Ltd. V/s. CCE, Chandigarh 2013 (293) E.L.T. 382 (Tri. - Del.). In the latter case, the Tribunal held that Cenvat credit cannot be denied to the assessee on the ground that process of galvanization does not amount to manufacture. Accordingly, the demand raised for disallowing the Cenvat credit on C.R. coils and zinc was held unsustainable as Cenvat credit Rules, 2004 allow the clearance of inputs 'as such' or after partially processing on reversal of Cenvat credit availed on these inputs. 8. Similarly, we may also take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... credit - Where an assessee has paid duty of excise on a final product and has been allowed credit of the duty or tax or cess paid on inputs, capital goods and input services used in making of the said product, but subsequently the process of making the said product is held by the court as not chargeable to excise duty, the Central Government may, by notification order for non-reversal of such credit allowed to the assessee subject to such conditions as may be specified in the said notification: Provided that the order for non-reversal of credit shall not apply where an assessee has preferred a claim for refund of excise duty paid by him: Provided further that the Central Government may also specify in the notification referred to above for non-reversal of credit, if any, taken by the buyer of the said product. The contention of the learned JCDR is that the said section has not been considered in any of the judgments relied upon by the appellant. It is her submission that once a statutory provision exist in the act, the same should not be ignored and the appellant, instead of challenging the impugned order before the Tribunal, should have approached the Board for issuance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... strips do not amount to manufacture, such processors are taking Cenvat credit and justifying their Cenvat availment on ground that they are paying duty on final products. 2. The matter has been examined. As per the provisions of Rule 3 of the CENVAT Credit Rules, 2004, read with Rule 6, credit of duty paid on the inputs is allowed only if these inputs are used in the manufacture of a final product. The Board vide Circular dated 26-9-2007 issued from F. No 93/1/2005-CX3, had clarified that if the process does not amount to manufacture, duty is not required to be paid and hence no Cenvat credit of duty paid on inputs is admissible. Attention is also invited to the provisions of Section 5B of the Central Excise Act, 1944, where an assessee, who has paid excise duty on a product under the belief that the same is excisable, but subsequently the process of making the said product, is held by the Court as not amounting to manufacture, in such cases, the Central Government may issue an order for non-reversal of such credit in past cases. 3. In view of above, following instructions are issue:- (i) In cases where the process undertaken by an assessee indisputably does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ieve the object of uniformity and to avoid discrimination. Such circulars bind the officers only when they act in their administrative capacity. It must be clearly understood that the Board's circulars instructions or directions cannot in any manner interfere with quasi judicial powers of the Assessing Officers. Officials exercising quasi judicial powers must ignore any circular or direction interfering with their quasi judicial functions. 95. Whenever any authority is conferred with the power to determine certain questions in judicial and / or quasi judicial manner, the authority is required to exercise the power conferred upon him as per his own discretion. This is the essence of judicial and quasi judicial function. The authority exercising such powers cannot be influenced by any directions, instructions or the Circulars that may be issued by any other agency. Consequently, the Circular issued by the respondents cannot be permitted to interfere with the discretion of the judicial and quasi judicial authorities. 96. The power to impose tax is essentially a legislative function and according to our constitutional scheme it cannot be delegated. The E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is settled law that if an activity carried out does not amount to manufacture within the framework of section 2 (f) of Central Excise Act, 1944 no stretch of imagination, that shall be manufacture without satisfying legislative mandate. If there is manufacture law permits availing of Cenvat credit on the inputs used for such manufacture. But because an assessee assumes an activity to be manufacture that does not confer right on him to avail input credit under the law. In the case of CCE Vs . Creative Enterprises - 2009 (235) ELT 785 (Guj .) because both the parties agreed the activity to be manufacture, allowing of Cenvat credit against duty liability on the goods manufactured remained unquestioned by Hon'ble High Court. That judgement makes clear that no one can assume an activity to be manufacture and mere assumption does not confer right to Cenvat credit. 21. Issue is also settled in terms of the Circular No. 940/01/2011-CX dated 14.01.2011 and Circular No. 911/01/2010-CX dated 14.01.2011 in this regard. For ready reference both circulars are reproduced Circular No. 911/1/2010- CX., dated 14-1-2010 F.No.267/116/2009-CX8 Subject: Irregular availment of Ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oard's Circular No. 937/27/2010-CX., dated 26.11.2010 issued from F.No . 52/1/2009-CX 1 (Pt.) [2010 260 E.L.T. T3], wherein based on the opinion of the Law Ministry, it was clarified that in view of the specific bar provided under sub-section (1A) of Section 5A of the Central Excise Act, 1944, the manufacturer cannot opt to pay the duty in respect of unconditionally fully exempted goods and he cannot avail the CENVAT credit of the duty paid on inputs. 2. It is further clarified that in case the assessee pays nay amount as Excise duty on such exempted goods, the same cannot be allowed as CENVAT Credit to the downstream units, as the amount paid by the assessee cannot be termed as duty of excise under Rule 3 of the CENVAT Credit Rules, 2004. 3. The amount so paid by the assessee on exemption goods and collected from the buyers by representing it as duty of excise will have to be deposited with the Central Government in terms of Section 11D of the Central Excise Act, 1944. Moreover, the CENVAT Credit of such amount utilized by downstream units also needs to be recovered in terms of the Rule 14 of the CENVAT Credit Rules, 2004. 4. Trade Industry as well as filed fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no duty shall be leviable. It contravened the law resorting to recover the duty paid by it on inputs. 24. Law on the issue has been settled in 2003. It was clarified by the Board vide Circular dated 26.9.2007 issued from F.No . 931/1/2005-CX 3 that if a process does not amount to manufacture, duty is not required to be paid and no Cenvat credit of duty paid on inputs is available. 25. Appellants cannot be allowed to circumvent the legal position and presumed an activity as manufacture and avail Cenvat credit on inputs forcibly and pay duty on finished goods not required to be paid under the law and then pass the credit to the buyer. In view of above discussion, I am of the view once the activity of cutting or slitting of steel sheet in coil form does not amount to manufacturing activity as held by Hon'ble Delhi High Court in the case of Faridabad Iron Steel Traders Association Vs. Union of India 2004 (178) E.L.T. 1099, followed by circulars issued by Central Board of Excise and Customs there is no question of granting input credit against such manufacture. 26. In view of above, I am of the firm view that credit availed by the appellant on inputs against a activity no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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