Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & ... vs M/S. Fine Packaging Pvt. Ltd on 19 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.
Appeal No. E/12/2007_
E/CO-78/07
(Arising out of Order-in-Appeal No. RKR(162)134/2006 dt. 31.10.2006 passed by the Commissioner Central Excise & Customs (Appeals) Aurangabad.)
For approval and signature:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
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1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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Commissioner of Central Excise & Customs, Aurangabad
:
Appellant
VS
M/s. Fine Packaging Pvt. Ltd.
:
Respondent
Appearance
Shri Sanjay Hasija, Supdt. A.R. for Appellant
Shri D.R. Gadekar, Consultant for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 19/01/2016
Date of decision : 19/01/2016
ORDER NO.
Per : Ramesh Nair
The appeal is directed against the Order-in-Appeal No. RKR(162)134/2006 dt. 31.10.2006 passed by the Commissioner Central Excise & Customs (Appeals) Aurangabad, wherein the learned Commissioner allowed the appeal of the respondent. The issue involved in the case is that whether the Cenvat Credit is allowed on the inputs used in the manufacture of exempted goods or non dutiable goods. The respondents are procuring duty paid Polyester/BOPP Film and carrying out printing and lamination processes on the said film. Thereafter laminated films were slit to the required sizes and cleared to the customers on payment of duty. The respondent availed Cenvat Credit of duty paid on the Polyester/BOPP Film as well as other raw materials such as ink, adhesives, solvents etc. The department has proceeded to deny the Cenvat Credit on the ground that Honble Supreme Court in the case of M/s. Metlex (I) Pvt. Ltd. held that laminating/metalizing of duty paid film does not amount to manufacture. In view of this judgment Cenvat Credit is not admissible on the inputs used in the non-excisable goods. The demand of Cenvat Credit along with penalty and interest were confirmed in the adjudication Order No. 10/CEC/Addl.Commr./2006 dt. 8.6.2006. In the appeal before the Commissioner (Appeals) the respondent succeeded, hence the present appeal by the Revenue.
2. Shri Sanjay Hasija, Learned Supdt. (A.R.) appearing on behalf of the Revenue reiterating the grounds of appeal submits that Cenvat Credit on the inputs can only be allowed if the inputs are used in the manufacture of excisable goods. In the present case, it is un disputed that the inputs were used for the activity which is not amount to manufacture hence the credit is inadmissible. He placed reliance on the following judgments.
(i) Bee Am Chemicals Ltd. Vs. Commissioner of C. Ex. Raigad 2014 (309) ELT 183 (Tri.-Mumbai
(ii) Commissioner of C. Ex. Vs. Sheetal Mercantile Pvt. Ltd.
2015 (315) ELT 540 (Del.)
3. On the other hand, Shri D.R. Gadekar learned Consultant appearing on behalf of the respondent submits that even though the activity is not amount to manufacture, since the respondent have discharged excise duty on the laminated films credit should be allowed. He further reiterates the findings of the impugned order. He also placed the reliance on the following judgment:-
(i) Collector of Central Excise, Bombay-I Versus Sigma Paints Ltd.
1994 (69) E.L.T. 779 (Tribunal)
(ii) Kuwer Industries Ltd. Versus Commissioner of Central Excise, Noida 2005 (184) E.L.T. 49 (Tri. - Del.)
(iii) Bharat Gears Ltd. Versus Commissioner of C. Ex., Mumbai-III 1996 (87) E.L.T. 668 (Tribunal)
(iv) Aask Engineers Versus Commissioner of Central Excise, Pune 1998 (97) E.L.T. 99 (Tribunal)
4. We have carefully considered the submission made by both the sides. We find that the facts of the case is not much in dispute inasmuch as the respondent have availed the credit on inputs which was used in the process of printing and lamination processes of the Polyester/BOPP Film and this activity was held to be non manufacture. We find that Ld. Commissioner has allowed the credit on the following reasons:
(i) The present case is covered in the Tribunals decision in the case of PSL holding Ltd. Vs. CCE Rajkot 2003 (156) ELT 602 (Tri.Mum) and in a case reported in 2006 TIOL-669-CESTAT-Mumbai involving Ajay Metachem Pvt. Ltd. Vs. Commr. CE, Pune-III
(ii) It is seen that the appellant has utilized credit to the tune of Rs.28,38,345/- for payment of duty to the tune of Rs.36.36 lakhs as reported by Dy.Commissioner, Aurangabad which was not required to be paid.
(iii) Credit thus was effectively reversed and revenue cannot ask for reversal of credit.
(iv) Further Honble Supreme Court in a case as reported in 2005 (179) ELT 276 (SC) has held that when credit amount allegedly wrongly availed is exactly equivalent to the amount of excise duty paid, the consequence is revenue neutral and demand on this count cannot be sustain. We find that besides the above finding, even if it is accepted that the activity of the respondent does not amount to manufacture, Cenvat Credit on the inputs cannot be denied as per the provisions of Rule 16 of the Central Excise Rules, 2002 which is reproduced below:
Rule 16. Credit of duty on goods brought to the factory. -
(1) Where any goods on which duty had been paid at the time of removal thereof are brought to any factory for being re-made, refined, re-conditioned or for any other reason, the assessee shall state the particulars of such receipt in his records and shall be entitled to take CENVAT credit of the duty paid as if such goods are received as inputs under the CENVAT Credit Rules, 2002 and utilise this credit according to the said rules.
(2) If the process to which the goods are subjected before being removed does not amount to manufacture, the manufacturer shall pay an amount equal to the CENVAT credit taken under sub-rule (1) and in any other case the manufacturer shall pay duty on goods received under sub-rule (1) at the rate applicable on the date of removal and on the value determined under sub-section (2) of section 3 or section 4 or section 4A of the Act, as the case may be.
Explanation. - The amount paid under this sub-rule shall be allowed as CENVAT credit as if it was a duty paid by the manufacturer who removes the goods.
(3) If there is any difficulty in following the provisions of sub-rule (1) and sub-rule (2), the assessee may receive the goods for being re-made, refined, re-conditioned or for any other reason and may remove the goods subsequently subject to such conditions as may be specified by the Commissioner.
From the plain reading of the above Rule it can be seen that under this provision Cenvat Credit is allowed on the duty paid material treating it as inputs for the purpose of various processes and after processing if the activity is not amount to manufacture the assessee is required to clear such processed goods on payment of duty which is equal to Cenvat Credit and if the activity is amount to manufacture then excise duty is required to be paid on transaction value. As per this clear provision, even if, activity does not amount to manufacture the credit is permissible. As per the above discussion, we are of the considered view that Cenvat Credit on the inputs used in the process which does not amount to manufacture, is admissible. Therefore, the impugned order is upheld and the Revenues appeal is dismissed. Cross-objection also stands disposed of.
(Pronounced in court) (Raju) Member (Technical) (Ramesh Nair) Member (Judicial) SM.
2Appeal No. E/12/2007_ E/CO-78/07