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TMI Blog2025 (3) TMI 1133X X X X Extracts X X X X X X X X Extracts X X X X ..... ecision of Hon'ble High Court of Delhi in the case of Faridabad Iron & Steel Traders Association, as maintained by Hon'ble Supreme Court in the pronouncement reported in 2005 (181) ELT A68 (SC). Accordingly, the Department was of the view that the availment of credit by the Respondent on the said goods and utilization of the same against clearance of the goods so processed, is irregular in terms of sub-rule (1) and (4) of Rule 3 of the CENVAT Credit Rules, 2004. 1.1. On the basis of the above allegations, the following notices were issued to the Respondent. Sl. No. Show Cause Notice No. DATE PERIOD CENVAT E.CESS S&HE CESS TOTAL 1 V(15)2/HAL/AE/SRCU/ 2010/24948 29-11- 2010 NOV,05- MAR,10 34,82,36,460/- 69,64,747/- 26,35,253/- 35,78,36,460/- 2 V.Ch.48(15)53/CE/HAL /Adjn/11/7423 09-05- 2011 APR,10- MAR,11 5,36,48,821/- 10,72,981/- 5,36,496/- 5,52,58,298/- 3 V.Ch.72(15)33/CE/HAL /Adjn/2012/6691 25-04- 212 APR,11- MAR,12 1,08,10,519/- 2,16,293/- 1,08,111/- 1,11,34,923/- TOTAL 41,26,95,800/- 82,54,021/- 32,79,860/- 42,42,29,681/- 1.2. All the above Notices were taken up together for adjudication in common proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty or service tax on such goods or services, as the case may be, or two thousand rupees, whichever is greater." Accordingly, the Committee took the view that once it is established that credit has been wrongly availed, then there is no scope to waive penalty under Rule 15(1) of CENVAT Credit Rules, 2004; that since the ld. adjudicating authority had disallowed the CENVAT Credit and ordered for recovery of the same, penalty under Rule 15(1) of the CENVAT Credit Rules, 2004 should have been imposed. Thus, the Committee opined that the ld. adjudicating authority erred in his decision by not imposing any penalty under Rule 15(1) of CENVAT Credit Rules, 2004. 2.2. Accordingly, Revenue has filed appeal against the impugned order for determination of the following: (i) Whether the Commissioner has erred in his decision by partial dropping of the demand for the period from 1st November, 2005 to March 2010 for the first Show Cause Notice as the Noticee did not comply the letter/order dated 12.07.2006 of the Assistant Commissioner to follow the procedure laid down in Rule 3(4) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) CCE Pune-I Vs. Keetex [2008 (227) E.L.T. 536) (ix) Ajinkya Enterprises Vs. CCE Pune-111 [2009 (243) E.L.T. 566] (x) A-one laminators Vs. CCE [2012 (276) Ε.Ι.Τ. 172] 4. Heard the Ld. Authorized Representative of the Revenue appearing before us and perused the records. 5. We observe that the Respondent are engaged in cutting/slitting of H.R.Coils and conversion of the same to M.S. Plates. The said process does not amount to manufacture. Since the process does not amount to manufacture, the Respondent took recourse of Rule 16 of the Central Excise Rules, 2002, i.e. they used to bring the H.R. Coils under Rule 16(1) of the said rules and availed CENVAT Credit in terms of the said rules. After the conversion i.e., cutting/slitting of the goods, the resultant products, i.e. M.S. Plates were removed by debiting an amount as prescribed under Rule 16(2) of the said rules. This procedure adopted by them was known to the Department as the said procedure was advised by the jurisdictional Assistant Commissioner. 5.1. We find that the jurisdictional Assistant Commissioner vide his letter C.No. V(30)8/CE/Tech/HWD-I/Misc/2005/2928 dt. 22.09.2006 directed the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on does not amount to manufacture. Therefore, the issue before us is that whether the CENVAT credit taken by the appellants on HR/CR coils which were cleared by them on payment of duty, after the process of de-coiling, cutting and slitting into specific sizes and thereafter carrying out pickling and oiling is required to be reversed or not. 7. The learned SDR submits that as per law, the appellants were required not to take CENVAT credit on these goods i.e. HR/CR coils as their activity does not amount to manufacture. Therefore, the CENVAT credit taken by them is wrong and in that event, they are required to reverse the CENVAT credit. He further submitted that the duty was paid without any authority of law. Therefore, the question of allowing the credit on input does not arise. He relies on the decision of Velere Power India Pvt. Ltd. (supra), wherein it was held by this Tribunal that CENVAT credit was taken wrongly and duty equal to CENVAT credit is required to be paid under Rule 3(5) of Cenvat Credit Rules when the activity does not amount to manufacture. In that case the assessee took the credit on the inputs and after processing of inputs, the final products were cleared on l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate account for inputs which are going in manufacturing of exempted goods. But, in case the assessee does not maintain separate account of inputs, in that case the assessee is required to pay 8%/10% of the amount of exempted goods. In that scenario, the Hon'ble High Court held that the assessee is required to reverse 8%/10% of the amount. Therefore, the facts of that case are not relevant to the facts of this case. 9. We have seen from the facts of this case where as per Circular dated 7-9-2001, the activity of slitting of HR/CR coils into strip was amounted to manufacture. It is admitted fact that the said Circular was withdrawn on 2-3-2005. Thereafter, the appellants sought clarification through various letters to the department to clarify whether the composite activity of de-coiling of HR/CR coils, cutting and slitting into specific sizes and thereafter pickling and oiling amounting to manufacture or not. That was clarified only on 24-6-2010. In the case of Resistance Alloys (supra) and P.V. Sanghvi (supra), wherein it was held that process of pickling and oiling would not amount to manufacture, but in the case in hand before us, the appellants were undertaking composite activ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Creative Enterprises (supra) which was upheld by the Hon'ble Apex Court that once duty on final products has been accepted by the department in the case, CENVAT credit cannot be denied even if the activity does not amount to manufacture. 12. Therefore in view of the above discussion, we find that the duty paid by the appellants has been accepted by the department which is admittedly more than the CENVAT credit availed by the appellants. Therefore, following the various judicial pronouncements as discussed herein above, we hold that the appellants are not required to reverse the credit. Accordingly, the appeals are allowed with consequential relief." 7.2. By relying on the decision cited supra, we hold that the Respondent has rightly availed credit on the inputs and paid an amount equal to the credit taken at the time of clearance of the goods as provided under Rule 16(2) of the Central Excise Rules, 2002. Thus, we observe that the allegation of irregular availment of credit against the Respondent does not survive. Once, the credit availed by the Respondent is found to be regular, there is no irregularity in utilising the same to discharge the payment as per Rule 16(2) of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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