JUDGMENT

Ritu Bahri, J.

The revenue has come up in appeal against the judgment dated 20.03.2013 (Annexure A-3) passed by the learned Customs, Excise and Service Tax Appellate, Tribunal, Principal Bench, New Delhi whereby the appeal filed by the respondent-M/s. Hansa Tube Pvt. Ltd. against the order dated 09.09.2005 (Annexure A-2) passed by the Commissioner & Central Excise Chandigarh, had been allowed.

2. The respondent-company is engaged in manufacturing of Galvanized Plain Coils (G P Coils), Galvanized Plain Sheets ( G P Sheets) and Galvanized Corrugated Sheets (G C Sheets) falling under Chapter subheading 7210.19 and 7210.11 of the First Schedule to the Central Excise Tariff Act, 1935. During the audit of 2002-03 and 2003-04, the Central Excise Officer observed that the company had wrongly availed Cenvat credit to the tune of Rs.1,21,86,295/- on C.R. Coils and Zinc inasmuch as the said goods were used in the process of galvanization of C.R. Coils for conversion into G.P. Coils and the process of conversion of C.R. Coil into G.P.Coil involves only process of galvanization which does not amount to 'manufacture' as per section 2(f) of the CENTRAL EXCISE ACT , 1944 (hereinafter referred to as the 'Act'). The noticee had cleared the G.P. Coils for export on payment of duty under claim for rebate amounting to Rs.88,71,269/- by debiting the duty amount from the wrongly availed amount of Cenvat Credit. In this backdrop, show cause notice dated 04.05.2005 (Annexure A-1) was issued for disallowing Cenvat Credit amounting to Rs.1,21,86,295/- and also out of the said amount, an amount of Rs.88,71,269/- was to be recovered in cash as per Section 11 A of the Act alongwith interest and penalty as well.

3. Vide order dated 09.09.2005 (Annexure A-2), the Commissioner passed the following order:-

"14. In view of the discussions and findings in the foregoing paras, I pass the following order:

(i) I confirm the demand of Cenvat credit amounting to Rs.1,17,45,077/- (Rupees one crore seventeen lacs forty five thousand seventy seven only) against M/s Hansa Tubes Pvt. Ltd.-Unit-II, Lalru, Derabassi under Rule 12 of the Cenvat Credit Rules read with Section 11A of the Act. Out of the said amount, an amount of Rs.88,71,269/- (Rupees eighty eight lacs seventy one thousand two hundred sixty nine only) is ordered to be paid through PLA. On the above confirmed demand, the Noticee would also pay interest under Section 11AB of the Act,

(ii) I impose penalty of Rs.1,17,45,077/- (Rupees one crore seventeen lacs forty five thousand seventy seven only) upon Hansa Tubes Pvt. Ltd., Unit-II, Lalru (Derabassi) under Rule 13 of the Cenvat Credit Rules read with Section 11AC of the Act."

4. The stand taken by the respondent before the Customs Excise & Service Tax Appellate Tribunal (in short 'Tribunal') was that C.R. Coils are basic raw material for G.P.Sheets as well as G.C.Sheets. Even if the process of conversion does not amount to manufacture in the CENTRAL EXCISE ACT , the inputs can be cleared as such or after being partially processed on reversal of amount equivalent to credit availed on such inputs. With respect to demand of rebate claim amounting to Rs.88,71,269/- the stand was that as per Rule 18 of the CENTRAL EXCISE RULES , the exporter is entitled to claim rebate of duty paid on inputs as well as duty paid on final products.

5. The Tribunal, while referring to the judgment passed by the High Court of Gujarat in the case of Commissioner of Central Excise v. Delta Corporation reported in 2013 (287) ELT 15 (Guj.) held that credit could not be denied on the ground that no manufacturing activity was carried on by the assessee and hence t