10 June 2013
A company engaged in manufacturing of cement pipes, purchased semi finished pipes from other unit after paying central excise duty. The company did some work on these pipes i.e. turning to joint the pipes with the help of coupler and quality testing as per BIS specification. Without testing the pipes can not be sold. The company availed cenvat credit against the sale of pipes and paid the difference of duty on value addition. Excise department has refused to allow the cenvat credit stating there was no manufacturing process involved. Can department's view is right, if right, than can department charge duty on sale as it is not excise able. Views are solicited with relevent case law. Thanks.
10 June 2013
If your activity amounts to manufacture or production of goods then pay the duty on final product and can take the cenvat credit on input.
11 June 2013
Thanks for reply but it is not clear If our activity is not covered under definition of manufacturing, than will it attract excise duty if it sold and cenvat has not been allowed to us?
11 June 2013
First there are software where specific case laws on manufacture - cement pipes are available- ex cus. You may examine that. Guniting is manufacture if I remember- at least 10 years back I had examined.
There are a number of cases where the denial of credit in such cases has been held as incorrect as once the duty payment is accepted then credit not to be denied. Of course if one avails credit for pure trading this rule would not apply.
CAclubindia
