TMI Blog2016 (11) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... in the appellant's case cannot be allowed for any further payment of duty and will necessarily lapse. So the claim of the appellant that the CENVAT credit lying in their balance, which was taken when the process was not manufacture, cannot be allowed to pay duty for finished products after 2011 when the process is treated as manufacture as per new Chapter Notes. Levy of penalty u/r 15 of CENVAT Credit Rules 2004 - Held that: - penalty set aside. Appeal disposed off - CENVAT credit of Re availed and utilised for payment of duty on domestic and export clearances is non-recoverable - CENVAT Credit of ₹ 1,41,58,285/- lying in balance is CENVAT Credit account as on 31-03-2011 shall lapse - Penalty of ₹ 2000/- imposed by adjudicating authority is set aside - appeal partly allowed in favor of appellant. - Appeal No. E/2123/2012 - ORDER No. A/30760/2016 - Dated:- 12-9-2016 - Ms. Sulekha Beevi, C.S., Member(Judicial) And Shri Madhu Mohan Damodhar, Member(Technical) Shri Ashok Deshpande, Advocate for the appellant. Shri Nagraj Naik, Deputy Commissioner(AR) for the respondent. [Order per: Sulekha Beevi, C.S.] The facts of the case as put forth by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... their final products That the Department had collected the duty so paid by the Appellant on finished products without any issues. That the entitlement of CENVAT Credit is not questioned by the Department Therefore when the department has not disputed on the above facts, they cannot now question the utilisation of CENVAT Credit. 22. Ld Counsel further submits that it is no more res integra that CENVAT Credit cannot be denied on the ground that there is no manufacture and the final product is not excisable. He placed reliance on a number of judgements, inter alia , the following, in this regard. i) In Hino Motors Sales India Pvt Ltd, V/sg CCE 2014 (299) ELT 49 (T-Mum). ii) Anutone Acoustics Ltd. v/s CCE, 2013 (298) ELT 246 (T-Mum) ii) CCE V/s. Ajinkya Enterprises, 2012-TlOL-578-HC-MUM-CX, Manufacture iv) CCE C V/s. Annapurna Industries Pvt Ltd. 2010 (255) ELt 197 (Guj) Refund of Credit. v) CCE C V/s. Creative Enterprises, 2009 (235) ELT 785 (Guj.) Maintained by Supreme court in CCE VISO Creative Enterprises, 2009 (243) ELT A 120 (SC). 3. On behalf of the respondent department, Ld. AR Shri Nagraj Naik reiterated the findings in the im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lographic transformation and hence the process will not amount to manufacture. 6.3. Identical process carried out by Indian Rare Earths Ltd had been held as not involving any manufacture in the case of India Rare Earth Ltd. Vs. Commissioner [2002(139) ELT 352 (Tri.)] cited by the Ld AR supra. Appellants have argued that the appeal by Department was dismissed by the Hon'ble apex Court only on technical ground that Committee on Disputes have declined permission to CBEC to pursue the appeal. Be that as it may, the fact remains that the dismissal by the Hon'ble apex Court will have the effect of the earlier Tribunal decision continuing to be in force. 6.4 In any case, even a subsequent Tribunal decision reiterated the very same view in the case of Kerala Minerals Metals Ltd V/s CCE Kochi [2007 (214) ELT 556 (Tri-Bang)], the relevant portion of which is extracted below: 3. The learned Counsel submits that the Issue is covered by the judgment in the case of Indian Rare Earths Ltd. v. CCD, BBSR-I - 2002 (139) 352 (Tri. -Kolkata) where rare mineral sands were subjected to physical and mechanical process for separation of chemicals. Such process was held to be not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent case also, the minerals which are present in the beach sand are separated by magnetic, electrostatic and gravity process. These minerals continue to remain as minerals in the same form. They had not changed their identity nor are they known by a different name in the market. There is no chemical or physical change in the mere characteristics. Therefore, the judgment of Indian Rare Earths Ltd. case, which is based on to 2 Supreme Court judgments, clearly applies to the facts of the case. Respectfully following the same, the impugned orders are set aside and appeals are allowed with consequential relief; if any. 7. Therefore, following the ratio laid in these judgments, we are able to conclude that the activity during the relevant period does not amount to manufacture. 8. During the relevant period (September 2009 to March 2011) the appellants took CENVAT credit to the tune of ₹ 4,59,05,807/- on inputs, capital goods and input services. Further an amount of ₹ 1,41,58,258/- pertaining to the credit taken on inputs, capital goods input services was lying in their CENVAT account as balance (as on 31/03/2011). Coming to this issue, there are a plethora of judgeme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bility to excise duty and non-exigibility to duty. The law is thus very clear on this point, hence unutilised credit in the appellant's case cannot be allowed for any further payment of duty and will necessarily lapse. So the claim of the appellant that the CENVAT credit lying in their balance, which was taken when the process was not manufacture, cannot be allowed to pay duty for finished products after 2011 when the process is treated as manufacture as per new Chapter Notes. 8.3 Board's circular no 911/01/2010CX dated 14/01/2010 has clearly instructed in para 3(i) therein, that in cases where the process undertaken by an assesse indisputably does not amount to manufacture, the department should inform the assessee about the correct legal position and advise him not to pay duty and not to avail credit on inputs. 8.4 In our view, issue of the Show Cause Notice on 06.09.2011 should suffice as sufficient information to the appellant and they should have suo moto voluntarily reversed the unutilised credit irregularly availed. Appellants have not done so, instead, they are seeking to hang on to credit which is not legally due to them ab initio. This is certainly ..... 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