CESTAT allows Cenvat Credit on ‘inputs’ used in the Manufacture of Rerolled Products, Excise Duty not Leviable [Read Order]

Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), allowed cenvat credit on ‘inputs’ used in the manufacture of Rerolled products and held that the excise duty not leviable on the same.

The allegation of the department is that the appellant had availed cenvat credit on TMT Cutting, Square Cobble, MRM Rolls Spoils etc considering them as ‘inputs’ used in the manufacture of their final products. The Department’s contention is that the appellant is only a Rolling Mill and does not have a furnace for melting such waste and scrap and hence they could not have used these scrap as ‘inputs’ to manufacture their finished goods namely hot rolled products.

The appellant, M/s Sarva Mangalam Gajanan Steel Pvt Ltd stated that they purchased these goods on payment of central excise duty. The goods so purchased have been subjected to heating and straightening to make them suitable for rolling and sometimes cut to sizes and then rerolled to manufacture their final products. The rolling mill installed by them has the capacity to roll such items. The Rerolled products so manufactured by them have been cleared on payment of central excise duty.

As per Rule 3 of Cenvat Credit Rules 2004, any manufacturer can avail credit of duty paid on any goods (except light diesel oil, high-speed diesel oil and motor spirit) treating the same as ‘input’ if those goods are used in or in relation to the manufacture of their final products.

Rule 3(1) of the Cenvat Credit Rules, 2004 clearly states that a manufacturer or producer of final products and a provider of output service shall be allowed to take credit of the duty paid on eligible inputs or services. It means that cenvat credit can be availed by the manufacturer or producer of final products who uses the inputs in or in relation to the manufacture of final products.

A Two-Member Bench consisting of P.K Choudhary, Judicial Member and K Anpazhakan Technical Member observed that “the appellant is eligible for the cenvat credit availed on the ‘inputs’ used in the manufacture of their final products namely, Rerolled products, etc and hence the demands made in the impugned order is not sustainable.”

To Read the full text of the Order CLICK HERE

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