2025-VIL-1635-CESTAT-KOL-CE
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CENTRAL EXCISE CESTAT Cases

Central Excise - Availment of CENVAT Credit on partly reduced sponge iron - Appellant is engaged in the manufacturing of sponge iron through the rotary kiln process. To optimize production and reduce costs, the appellant proposed to procure low content/off grade sponge iron (technically termed as "partly reduced sponge iron") from other manufacturers and reprocess the same in their existing kilns to improve its metallization and quality parameters for sale as finished sponge iron - Dept initiated an investigation regarding the appellant's availment of Cenvat Credit on partly reduced sponge iron, alleging that sponge iron cannot be manufactured from partly reduced sponge iron in the same kiln used for manufacturing sponge iron from iron ore - Whether the appellant was eligible to avail Cenvat Credit on the partly reduced sponge iron used as input for manufacturing sponge iron - HELD - The issue was no more res integra, as in the appellant's own previous case involving an identical issue, the Tribunal had held that since sponge iron is a specified goods under the Modvat Rules, it is an eligible input, and the benefit of Cenvat credit cannot be denied to the appellant merely on the ground that the use of low-grade sponge iron for the manufacture of high-grade sponge iron is not economical – Further, the appellant pays the cost of the material plus the Excise Duty and then avails the CENVAT Credit. As a matter of fact, if the goods cannot be used in the factory premises, in order to utilize the CENVAT Credit, no prudent business person would pay the value of the goods plus Excise Duty. The inputs have been accounted for by the appellant in the statutory records. The Revenue has not come out with any evidence that their input: output ratio is not matching - The impugned order is set aside and the appeal is allowed
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