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CX - Without a re-classification for assessment, there is no scope for denying CENVAT credit on inputs that find use in manufacture: CESTAT

 

By TIOL News Service

MUMBAI, MAR 22, 2018: THE appellant, a manufacturer, cleared goods as 'apparatus' under heading no. 9022 1410, 9022 1490 and 9022 9040 of the Schedule to the CETA, 1985. They were availing CENVAT credit and discharging duty liability at the effective rate as per serial no. 213 of the Table annexed to the notification no. 12/2012-CE dated 17th March 2012.

It was alleged by the Revenue that the impugned goods, not being 'apparatus', were not liable to duty; that the parts and accessories are classifiable under 9022 9090 and, consequently, ineligible for CENVAT credit.

SCN was issued seeking re-classification of the goods cleared as well as denial of CENVAT credit of Rs.77.59 lakhs for the period April 2011 to December 2015.

Both the lower authorities upheld the demand and, therefore, the appellant is before the CESTAT.

After considering the submissions made by both sides, the Bench observed thus –

++ The exercise undertaken by the adjudicating authority appears to have been engineered to deny CENVAT credit availed by them and, to which end, the dutiability of the finished product was called in question.

++ Central Excise Act, 1944 does not empower classification except for assessment of duty or for recovery of duties that are short-paid or not paid. Admittedly, this is not a case of short-payment or non-payment of duty. Neither is there any evidence on record to indicate that the returns filed by the appellant for the relevant period had been taken up for assessment requiring the classification to be ascertained.

++ In the absence of any assessment of returns, re-classification of the goods manufactured by the appellant will not stand test of law. Without such a re-classification for assessment, dutiability, or otherwise, of the manufactured goods cannot be re-determined and to the extent that duty liability has been discharged in accord with interpretation, learning or wisdom of the appellant, there is no scope for denying the CENVAT credit on the inputs that find use in manufacture.

The impugned order(s) was set aside and the appeals were allowed.

(See 2018-TIOL-910-CESTAT-MUM)


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