M/S.Aakash Auto Industries vs Cce, Delhi-Iv, Faridbad

(Arising out of OIA No.251/CE/Appeal/DLH-IV/2014 dt.26.9.14 passed by CCE(A), Delhi-IV, Faridabad)

Date of Hearing/Decision: 10.09.2015

For approval & Signature:

Honble Smt.Sulekha Beevi C.S., Member (Judicial)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes

M/s.Aakash Auto Industries Appellant

Vs.

CCE, Delhi-IV, Faridbad Respondent

Appearance:

Present for the Appellant: Shri Y.K.Kumar, Advocate

Present for the Respondent: Shri M.R.Sharma, DR

Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial)

Final Order No.52844/2015

Per: Sulekha Beevi C.S.

The appeal is filed challenging the disallowance of Cenvat Credit on bright bars used as inputs for manufacture of motor vehicles parts.

2. The appellants are engaged in the manufacture of goods falling under chapter heading 7318.10 of the First Schedule to the CETA, 1985. They were also availing credit in respect of duty paid on inputs. It was observed that the appellants had wrongly availed credit on bright bars as Honble Supreme Court in the case of CCE, Chandigarh vs. Vee Kayan Industries,1983 (83) ELT 262 (SC) held that no process of manufacture was involved during transformation of bright bars from wire rods/rounds as the bright bars were not excisable commodity. The show cause notice issued finalized by disallowing the credit and also imposing penalty. In appeal, the Commissioner (Appeals) upheld the same. Aggrieved, the appellant is before the Tribunal.

3. The credit on bright bars used by the appellant for manufacture of finished goods, is sought to be denied on the ground that the bright bars are not commodity subject to excise duty as no process of manufacture was involved during transformation of bright bars from wire rods/rounds. The short question involved is whether the appellants are entitled to credit on the duty paid on bright bars used as inputs. According to the department, the manufacturer who supplied the bright bars was not liable to pay duty on these items as no process of manufacture was involved in the transformation of bright bars from round bars and therefore the appellants cannot avail credit on these items. It needs to be stated that the payment of duty on bright bars is not disputed. So also there is no dispute that bright bars were used by the appellants to manufacture their final product. Again there is no case that the inputs supplied were not covered by valid document prescribed under the Cenvat credit Rules, for availing credit. The benefit of credit is sought to be denied on the ground that at the end of the supplier these goods were not excisable goods.

4. Interestingly, although the Apex Court in its judgment dated 20.09.1994 in CCE, Chandigarh Vs. Vee Kayan Industries, 1996 (83) ELT 262 (SC) had held that the processing of round bars into Bright bars would not amount to manufacture, the Department by Trade Notice No. 18/2003 dated 14/08/2003 had clarified that the process of making bright bars from wire rods amounts to manufacture. Duty was being collected upon bright bars and credit was being availed on such goods. A further trade notice dated 16/06/2004 was issued in clarification to trade notice No. 18/2003. It is discussed by the Commissioner (Appeals) that the issue was contentious and involved interpretation and therefore protective demands were issued during that time. It is seen that the cases were kept pending in the call books after issuance of show cause notice. Thereafter the matter has been adjudicated and order passed. This goes to show that the Department itself was under much confusion as to whether excise duty is to be collected or not on bright bars.

5. The Ld. Counsel for the appellant placed reliance on the decision in Light Lift Industries vs. CCE, Delhi-IV-2010 (262) ELT 602 (Tri.-Del.) wherein it has been held that the credit is admissible on bright bars. Further, when inputs is received by the appellant and used in or in relation to manufacture of final product and payment of duty is evidenced by the invoices, credit cannot be denied. The question whether the input is the result of a process of manufacture is irrelevant. What is relevant is whether duty has been paid or not on such input.

6. In view of the above discussion, the impugned order is set aside and the appeal is allowed with consequential reliefs if any.

(pronounced in the open court)

(Sulekha Beevi C.S.)

Member (Judicial)

mk

4