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2016 (5) TMI 835 - CESTAT MUMBAI

2016 (5) TMI 835 - CESTAT MUMBAI - TMI - Eligibility for Cenvat credit on inputs - Wire rod - Conversion of wire rod into Copper Coated CO2 Mig Welding Wire - Whether a process of drawing of the wire and amounts to manufacture or not - Held that:- as per Rule 16 of the Central Excise Rules, 2002, it is clear that the assesee is entitle to avail Cenvat credit on the duty paid goods even though the said duty paid goods does not undergo manufacturing process. The only condition is that if the duty .....

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entral Excise Rules. Even in the absence of specific amendment in respect to the wire drawing unit, the credit was otherwise admissible as per unamended Rule 16 of Central Excise Rules, 2002. - Decided against the revenue - Appeal No. E/1431/2005 & E/CO-371/2005 - Order No. A/87616-87617/16/EB - Dated:- 28-1-2016 - SHRI RAMESH NAIR, MEMBER (JUDICIAL) AND SHRI RAJU, MEMBER (TECHNICAL) For the Petitioner : Shri Sanjay Hasija Supdt. (A.R.) For the Respondent : Shri R.V. Shetty, Advocate ORDER PER : .....

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d falling under Chapter 7227.90 and 7228.30 is drawn in steel wire. Then this redrawn wire is further copper coated and wound in spools and sold as Copper Coated CO2 Mig Welding Wir, which is normally used as welding electrode in wire form. The respondent availed Cenvat Credit on duty paid wire rods and clears the welding wire on payment of duty. The department has initiated the action and contended that the activity of conversion of steel wire rod into Copper Coated CO2 Mig Welding Wires invol .....

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.2004, the appellant filed appeal before the Commissioner (Appeals). The Ld. Commissioner (Appeals) while allowing the appeal held that the activity of the respondent is conversion of wire rod into Copper Coated CO2 Mig Welding Wire, which not only involved the process of drawing of the wire but it also involves the process of copper coating. He further held that Hon ble Supreme Court judgment in the case of Technoweld Industries Ltd. (supra) is applicable only if the appellants are selling/clea .....

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nue has filed this appeal on the ground that the Supreme Court judgment in the case of Technoweld Industries Ltd. (supra) directly applies in the present case as the main activity involve is the process of drawing wires from wire rod which does not amount to manufacture consequently the respondent will not be eligible for Cenvat Credit. 3. Shri Sanjay Hasija. Ld. Supdt. (A.R.) appearing on behalf of the Revenue reiterating the grounds of appeal submits that it is a settled law that the drawing o .....

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ni-Oerlikon Ltd.& Another Vs.Union of India and Another-1981 (8) E..T. 432(Bom.) (v) Collector of C. Ex., Patna Vs. Usha Martin Industries Ltd.-1999 (018)E.L.T. 517 (Tribunal) (vi) Special Steel Ltd. Vs. Collector of Central Excise, Bombay-1992 (38) E.C.R. 152 (Cegat SB-BI) (vii) Union of India Vs. HUF - 1978 E.L.T. (J 389) (viii) Bothra Metal Industries Vs. Collector of C.Ex. Vadodara-1998 (99) E.L.T. 120 (Tribunal) (ix) Tega India Ltd. Vs. Commr. of C. Ex., Calcutta-II-2004 (164) E.L.T. 39 .....

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involves the manufacturing of welding electrode in wire form from the steel wire rod. Therefore the judgment of Hon ble Supreme Court in the case of Technoweld Industries (supra) does not apply in the facts of the present case. He further submits that in the whole proceeding the case of the Revenue is since the activity does not amount to manufacture the respondent is not entitled for Cenvat Credit. He submits that even if it is presumed that Cenvat Credit is not admissible but since the respon .....

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e 16 of the Central Excise Rules, 2002 which is reproduced below: Rule 16. Credit of duty on goods brought to the factory. - (1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rule .....

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case may be. Explanation. - The amount paid under this sub-rule shall be allowed as CENVAT credit as if it was a duty paid by the manufacturer who removes the goods. (3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner. From the above rule, it is clear .....

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therefore the Cenvat credit is admissible. This issue has been settled in the following judgments: (i) Raajratna Metal Industries Ltd. Vs. Union of India 2013 (294) E.L.T. 192 (Guj.) held that- 13. In the background of the aforesaid facts as well as the submissions advanced by the learned advocates for the respective parties, it is apparent that the impugned order passed by the Commissioner (Appeals) is based upon the decision of the Supreme Court in the case of Commissioner of Central Excise v. .....

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ance (Department of Revenue), No. G.S.R. 143(E), dated the 1st March 2002 shall stand amended and shall be deemed to have been amended retrospectively in the manner as specified in column (2) of the Schedule for the period specified in column (3) of that Schedule against the rule specified in column (1) of that Schedule. (2) Notwithstanding anything contained in any judgment, decree or order of any court, tribunal or other authority, any action taken or anything done or purported to have been ta .....

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with retrospective effect as if the Central Government had the power to make rules under section 37 of the Central Excise Act, retrospectively, at all material times. Explanation. - For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence, which would not have been so punishable if this section had not come into force. 15. By virtue of the aforesaid provisions, Rule 16 of the Rules has been amended retrospectively in th .....

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of July, 2004 under the rule as amended by sub-section (1), shall be deemed to be and always to have been, for all the purposes, as validly and effectively taken or done as if the amendment made by sub-section (1) had been in force at all material times. 16. The Schedule thereto indicates that Rule 16 of the Central Excise Rules has been amended by inserting the second proviso thereto, which reads thus : Provided that for the purposes of this rule, assessee shall include wire drawing unit, whi .....

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6 of the Rules lays down that where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take Cenvat credit of the duty paid as if such goods are received as inputs under the Cenvat Credit Rules, 2002 and utilize this credit according to the Rules. By virtue of the amendment, the petitioner .....

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. 19. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned order-in-appeal No. 376 to 377/2005, dated 8-6-2005, (Annexure I to the petition) and the orders-in-original No. 947/Ref/2004 and No. 948/Ref/2004 both dated 20-12-2005 passed by the Commissioner of Central Excise, Ahmedabad (Annexure G to the petition collectively), are hereby quashed and set aside. Consequently, the refund claims of the petitioners shall stand restored to the file of the adjud .....

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3 to 8-7-2004 and has issued Circular No. 831/18/2006-CX., dated 26-7-2006 advising that all demands of the nature being dealt with in this Appeal should be decided, considering the retrospective legislation made by the Government. 3. We have gone through the said retrospective legislation and the circular dated 26-7-2006 issued by C.B.E. & C. and we find that the demand confirmed by the Adjudicating Authority against Respondents in this case cannot survive in view of the said retrospective .....

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s duty and respondent who had received the wire would be eligible for its Cenvat credit. The only aspect which has to be checked in as to whether the wire manufacturers had obtained refund of the duty paid by them on the wire and in case they have taken the refund, the respondent would not be eligible for Cenvat credit. For this purpose, the matter has to be remanded to the original adjudicating authority. 8. In view of the above, discussion, the impugned order is set aside and the matter is rem .....

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in Rule 16 is aimed at facilitating wire drawing units, which had paid a sum equal to the duty leviable on drawn wire after availing the credit of duty paid on inputs for the said period. It is aimed at regularizing availment of credits at two stages and payment of an amount representing duty at one stage. The purpose of the amendment is to regularize credit taken at the input stage (on wire-rod), credit taken by the downstream user of drawn wire and the amount paid as central excise duty on cle .....

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