Custom, Excise & Service Tax Tribunal
M/S First Flexipack Corporation vs Jammu on 8 October, 2025
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. I
Excise Appeal No. 60538 of 2024
[Arising out of Order-in-Original No. JNK-EXCUS-000-COM-01-08-2024-25 dated
07.06.2024 passed by the Commissioner of CGST, Jammu]
M/s First Flexipack Corporation ......Appellant
Plot No. 103, Phase-III, Industrial Area,
Gangyal, Jammu & Kashmir
VERSUS
Commissioner of C E and C G S T, Jammu ......Respondent
OB 32, Rail Head Complex, Bahu Plaza,
Jammu, Jammu & Kashmir 180012
WITH
Excise Appeal No. 60611 of 2024
[Arising out of Order-in-Original No. JNK-EXCUS-000-COM-01-08-2024-25 dated
07.06.2024 passed by the Commissioner of CGST, Jammu]
M/s Ultra Laminates Pvt Ltd ......Appellant
Plot No. 113, Phase-III, Industrial Area,
Gangyal, Jammu & Kashmir 180010
VERSUS
Commissioner of C E and C G S T, Jammu ......Respondent
OB 32, Rail Head Complex, Bahu Plaza,
Jammu, Jammu & Kashmir 180012
AND
Excise Appeal No. 60620 of 2024
[Arising out of Order-in-Original No. JNK-EXCUS-000-COM-13-23-2024-25 dated
25.06.2024 passed by the Commissioner of CGST, Jammu]
M/s Montage Enterprises Pvt Ltd ......Appellant
Lane No. 4, Phase I, SIDCO Industrial Complex,
Bari Brahmna,
Jammu & Kashmir 181133
VERSUS
2 E/60538, 60611 & 60620/2024
Commissioner of C E and C G S T, Jammu ......Respondent
OB 32, Rail Head Complex, Bahu Plaza,
Jammu, Jammu & Kashmir 180012
APPEARANCE:
Shri K. K. Anand, Advocate for the Appellants
Shri Shyam Raj Prasad (Special Counsel), Authorized Representative for the
Respondent
CORAM: HON'BLE MR. S. S. GARG, MEMBER (JUDICIAL)
HON'BLE MR. P. ANJANI KUMAR, MEMBER (TECHNICAL)
FINAL ORDER NO. 61476-61478/2025
DATE OF HEARING: 23.07.2025
DATE OF DECISION: 08.10.2025
P. ANJANI KUMAR:
Brief Facts of the Cases:
M/s. Montage Enterprises Pvt Ltd (M/s MEPL) (Appeal No.
E/60620 of 2024; M/s. First Flexipack Corporation (M/s FFC) (Appeal
No. E/60538 of 2024) and M/s. Ultra Laminates Pvt Ltd (M/s ULPL)
(Appeal No. E/60611 of 2024) are engaged in the manufacture of
Plastic Laminates falling under Chapter Sub-Heading No. 3920.37,
3920.38 and 3920.32 of the First Schedule to the Central Excise Tariff
Act, 1985 and was availing the benefit of notification No. 56/2002-CE
dated 14-11-2002. Eleven show cause notices, covering the period
from July 2004 to November 2008, to M/s MEPL; 8 Show Cause
Notices, covering the period December 2003 to 9.5.2008 to M/s FFC
and two show cause Notices, covering the period march 2004 to July
2005, to M/s ULPL, were issued, seeking to deny refund by way of
self-credit and seeking to deny CENVAT credit availed along with
3 E/60538, 60611 & 60620/2024
penalties, alleging that they passed on inadmissible CENVAT credit to
other units; that they willfully included the element of freight which
is admissible deduction and that they have paid duty again on the
goods returned to avail undue credit, on the grounds that Hon'ble
Supreme Court, in the case of Metlex (I) Pvt Ltd 2004 (165) ELT 129
(SC) held that laminating/metallising of duty paid film did not
amount to manufacture.
2. M/s MEPL sent a representation to the Central Board of Excise &
Customs drawing their attention to the process of manufacture
undertaken by them; show cause notices issued to them; the
judgment of the Supreme Court in the case of Metlex (I) Pvt Ltd Vs.
Commissioner of Central Excise and the fact that there are many
other manufacturers of the same product across the country who are
paying central excise duty and are also availing the CENVAT credit.
CBEC clarified that the appellants were not required to pay Central
Excise duty on the activities undertaken by them in view of the
judgment of the Supreme Court in the case of Metlex (I) Pvt Ltd.
2.1. M/s MEPL addressed a letter to the Assistant Commissioner of
Central Excise, Jammu in which they again explained their process of
manufacture in detail and the fact that there is no
instruction/notification has been issued so far by the Government to
bring uniformity on all India basis regarding the non-exigibility of the
printed plastic laminates; they have decided to resort to status-quo
ante i.e. paying the excise duty from 22-11-2007 onwards in the light
of instructions No. 93/75/86-CX.3 dated 09-10-1986; the appellants
were informed by the department that since the CBEC has already
clarified that activities being undertaken by them did not amount to
4 E/60538, 60611 & 60620/2024
manufacture in view of Hon'ble Supreme Court judgment in the case
of Metlex (I) Pvt Ltd and that the appellants shall not avail any
CENVAT credit on inputs or shall not issue any excisable documents /
invoices in the matter as it would amount to violations to the Board's
directions as well as to the Hon'ble Supreme Court's judgment in the
matter. The appellants filed writ petitions i.e. OWP No. 1086/2007 by
M/s MEPL, OWP No. 398/2008 by M/s ULPL and OWP 399/2008 by
M/s FFC, before the J&K High Court; J&K High Court issued notice to
the respondent department and directed that the petitioner MEPL is
allowed to pay the excise duty.
2.2. Meanwhile w.e.f. 10-05-2008, Note 16 to chapter 39 was
amended to deem that the process of metallization or lamination or
lacquering shall amount to manufacture (as against earlier deeming
provision that the process of metallization amounted to
manufacture); M/s MEPL filed a refund claim dated 07-11-2008, of
Rs 24,75,654, for the month of October 2007 under Notification No.
56/2002-CE dated 14.11.2002 as amended in respect of CE duty
paid through PLA in the month of September 2007; Assistant
Commissioner vide Order-in-Original No. 1497/CE/AC/J 08 dated
07.11.2008 rejected the refund claim of Rs. 24,75,654/-; strangely a
show cause notice was also issued on the same day for recovery of
the Central Excise duty of the same amount i.e. Rs. 24,75,654/-
under Notification No. 56/2002-CE dated 14.11.2002 as amended;
further Ten show cause notices, covering the period from Nov. 2007
to June 2008, were issued to M/s MEPL on the same ground.
2.3. On an Appeal by M/s MEPL, Commissioner (Appeals), vide order
dated 22-06-2018, set aside the order dated 07-11-2008, passed by
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Assistant Commissioner, rejecting the refund; Commissioner
(Appeals) held that the case of M/s. Metlex India (P) Ltd is not
applicable as the facts are was distinguishable and decision of the
Tribunal in the case of Markwell Paper Plast Pvt Ltd 2012 (285) ELT
76 (Tri-Del) and Paper Products Ltd 2014 (304) ELT 145 (Tri-Mum)
are applicable as the process of manufacture undertaken by MEPL is
identical to the process involved in the above two cases. The said OIA
had been accepted by Revenue. As the grievance of M/s MEPL came
to be redressed in terms of order dated 22-06-2018, passed by
Commissioner (Appeal), Hon'ble J&K High Court disposed of the Writ
Petition; writ petitions filed by M/s First Flexipack Corporation (FFC)
and M/s Ultra Laminates (P) Ltd (ULPL) were adjourned and listed for
hearing on 23-05-2023. Commissioner, CGST Jammu, vide
impugned order dated 25-06-2024, -Original confirmed the duty
demand and denied CENVAT credit apart from demanding interest
and imposing penalties. Hence, the appeal No E/60620 of 2024.
2.4. M/s First Flexipack Corporation (Excise Appeal No. 60538 of
2024), were served with 8 Show cause Notices on the above lines.
The demands raised were confirmed vide impugned Order-in-Original
dated 07-06-2024 passed by Commissioner, CGST, Jammu. M/s.
Ultra Laminates Pvt Ltd (Excise Appeal No. 60611 of 2024), were
served two show Cause Notices on the same lines. Duty demand,
denial of CENVAT credit were confirmed with interest and penalties
vide Order-in-Original dated 18-06-2024 passed by Commissioner,
CGST, Jammu.
2.5. Vide order dated 19-07-2023, Hon'ble J&K High Court disposed of
the writ Petitions filed by ULPL and FFC holding that no writ lies
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against the show cause notices and that assessing Authority shall
consider the reply to the show cause notice submitted by the
petitioner along with all evidences, documentary or other, purely on
merits without being influenced by the circular of CBEC dated 07-11-
2007.
3. Findings of the Learned Adjudicating Authority in the impugned
orders are summarized as follows.
judgment of the Supreme Court in the case of Metlex (I) Pvt Ltd is
applicable as the product is a film to start with and remains a film after
process of lamination or metallization; no new distinct product comes
into existence and therefore, there is no manufacture
the process of lamination done by the appellants is same as in case
of Metlex (I) Pvt Ltd; the appellants did not distinguish process of
lamination done by them vis-à-vis Metlex (I) Pvt Ltd;
judgments relied upon by the appellants are earlier to the
judgment in the case of Metlex (I) Pvt Ltd; circular No. 937/8/86-CX3
dated 9/1/1986 issued by CBEC is also prior to the judgment in the
case of Metlex (I) Pvt Ltd;
the submission of the appellants that they were carrying additional
process of cutting/slitting of film into smaller widths and cutting the
length into smaller rolls in order to make the smaller rolls capable of
being fitted into automatic pouch sealing machines for packing of
items such as pan masala etc, is not acceptable;
at least 21 judgments by different fora followed the decision in the
case of Metlex (I) Pvt Ltd; Commissioner (Appeals) order dated 22-06-
2018 is not applicable as the same was passed without taking in to
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cognizance the decision of Hon'ble Apex Court in the case of Metlex (I)
Pvt Ltd;
The appellants had irregularly taken inadmissible refund/self-credit
during the period July, 2004 to June, 2008 in contravention of
provisions of the notification No. 56/2002-CE dated 14-11-2002, as
amended; the appellants were not entitled to take any CENVAT credit,
in terms of Rule 3 of CENVAT Credit Rules as the final product is not
excisable; CENVAT credit is available only when 'manufacture' takes
place.
3.1. In respect of M/s MEPL, the adjudicating authority confirms the
denial of self-credit of Rs. 6,45,840/- on the ground that the goods
were received back by the MEPL which were cleared earlier and sold
again after repacking the same; MEPL has not given any evidence to
counter the allegation in show cause notice that the goods were
subjected to repacking only; as self-credit was taken on the
manufactured goods while clearing them for the first time, self-credit
of same is not permissible as the goods which were retuned were
simply packed and re-cleared. However, Commissioner holds that the
allegation, that cost of transportation was included in the assessable
value, during the period June 2008 to November 2009, only to avail
excess self-Credit, is incorrect; sale transactions were on FOR basis
which means that all the cost till the delivery at buyer's premises
were to be borne by the seller i.e. M/s MEPL; the 'place of removal'
was the 'place of delivery' and assessable value has been rightly
calculated under section 4(1)(a).
Submissions on behalf of M/s MEPL
8 E/60538, 60611 & 60620/2024
4. Shri K.K. Anand, Learned Counsel for the appellants submits
that the materials required to manufacture Plastic Laminates, falling
under CETH 3920. 37 and 3920.38, are Polyethylene Films &
Printed/Unprinted/Metallized/ Unmetallized Plastic films in rolls falling
under CETH 3920.31/32/ 35/36/39 of CETH; consumables being
Adhesives (CETH35.06), Thinners (CETH 38.14) and Paper/Reel Core
(CETH 48.22). He submits that manufacture of printed plastic
laminates involves gluing and pasting of two or more layers of
different plastic materials of which one of the materials is printed
plastic film; as per requirement of industries such as Gutkha, food
etc, polyester film is also glued and pasted with at least two other
layers of printed plastic laminate and other plastic laminates;
lamination of two different plastic materials or more leads to
strengthening of the packing so that they become moisture, micro-
organism and oxygen proof; printed plastic laminates obtained by
MEPL are in jumbo rolls and these jumbo rolls are kept for 24 hours
in hot room to enable the bonding of poly film with plastic film;
thereafter, slitting, cutting and packing of jumbo rolls of printed
plastic laminates takes place; the appellants manufacture specially on
the orders for packing pan masala, gutkha and fast moving consumer
goods (FMCG) such as tea, coffee, namkeen, sweet, food products,
rice, ghee, oil, milk, pulses etc; therefore, one layer is of printed
lamination which contains brand name of a particular customer with
the details of that particular product. The manufacturing process is
different from the one undertaken by Metlex Industries(supra).
5. Learned Counsel submits that the issue involved in these batch of
appeals is squarely covered by the Order of the Commissioner
9 E/60538, 60611 & 60620/2024
(Appeals), dated 22-06-2018, wherein the Commissioner (Appeals)
decided the issue in favour of the appellants, relying on judgments of
this Tribunal the case of Markwell Paper Plast Pvt Ltd 2012 (285) ELT
76 and Paper Products Ltd 2014 (304) ELT 145 (Tri-Mum), by
distinguishing the judgement of Metlex (I) Pvt Ltd (supra), and
holding that the process(s) undertaken by them amounts to
manufacture; the said order has been accepted by Revenue. He
submits that the Tribunal held, in the case of Markwell Paper Plast Pvt
Ltd, that department having accepted the excise duty on the final
product cannot deny CENVAT credit on the inputs used for the
manufacture of the final product on such a technical plea and that the
same is against the principles of equity and Justice.
6. Learned Counsel submits that the above decision of the Delhi
Bench of the Tribunal involved four parties; Revenue preferred appeal
against M/s. Markwell Paper Plast Pvt Ltd before Allahabad High Court
and preferred appeal against M/s Sheetal Mercantile (P) Ltd and M/s.
Chawla Packaging before Delhi High Court. Delhi High Court upheld
the order of the Tribunal in the cases of M/s. Sheetal Mercantile (P)
Ltd and in the case of Chawla Packaging before the Delhi High Court
and in the case of Markwell Paper Plast Pvt Ltd before the Allahabad
High Court. The Delhi High Court upheld the order of the Tribunal in
the case of M/s. Sheetal Mercantile (P) Ltd 2015 (315) ELT 540 (Del)
and Allahabad High Court upheld the order of the tribunal in the case
of Markwell Paper Plast Pvt Ltd 2018 (9) GSTL 176 (All.) followed the
orders in the case of Sheetal Mercantile Pvt Ltd and Chawla Packaging
rendered by the Delhi High Court and upheld the order of the
Tribunal. The department did not challenge the two judgments
10 E/60538, 60611 & 60620/2024
delivered by the Delhi High Court. Judgment passed by the Tribunal in
the case of Markwell Paper Plast Pvt Ltd was followed by the Bombay
Bench of the Tribunal in the case of Paper Products Ltd 2014 (285)
ELT 76(T); the issue involved in the case of Markwell Paper Plast Pvt
Ltd is identical to the present case; Bombay High Court upheld the
order of the Tribunal 2015 (320) ELT A200 (Bom). He submits that
the Adjudicating authority did not follow Judicial Discipline by ignoring
the decision of three High Courts on the issue.
7. Learned Counsel submits that the ratio of the Apex Court's
decision in the case of Metlex (I) Pvt Ltd is not at all applicable to the
present case; the appellant therein was purchasing duty paid film and
thereafter used it to laminate and metalize the same; appellants
therein contended that they merely laminate or metalise the film and
that the product was a film to start with and remained a film after
process of lamination or metallisation; there is no finding on the
process of lamination or metallization resulting into a new product;
the processes carried out by MEPL amounted to coming into existence
of commercial new and a different product would also be evidently
clear from the judgment of the Supreme Court in the case of
Laminated Packings (P) Ltd 1990 (49) ELT 326 (SC), which was
followed by the Tribunal in the case of Markwell Paper Plast Pvt Ltd
(supra) and from the judgements in the case of Kores India Ltd 2004
(174) ELT 7 (SC) and Gramophone Co of India Ltd 1999 (114) ELT
770 (SC). He submits that as far as the present case is concerned,
the processes undertaken result in the manufacture of a commercially
new and different product which is a packing material; the finished
goods are packaging material which bear the brand names of
11 E/60538, 60611 & 60620/2024
different manufacturers such as Miraj Tobacco, Pan Parag Gutkha,
Bikaneri bhujia etc; there is no doubt that several layers of the film,
including one layer of printed plastic film, undergo various processes
and various layers of film get transferred/converted into packaging
material. He submits that this distinguishing and vital aspect of the
matter has been deliberately glossed over by the adjudicating
authority.
8. Learned Counsel submits that CBEC, vide circular No. 93/75/86-
CX.3 dated 9-10-1986, clarified, on the basis of the judgement of the
Supreme Court in the case of Empire Industries 1985 (20) ELT 179
(SC), that lacquered/ laminated or metallised plastic films
manufactured from duty paid bare films would be liable to excise
duty, notwithstanding the fact that such lacquered/ metallised or
laminated films fall under the same sub-heading of CETA and that
Chapter 39 being covered by Modvat Scheme, the benefit of Modvat
in respect of duty paid on bare films would be available towards
payment of duty on lacquered/metallised or laminated film. He
submits that the Adjudicating Authority wrongly holds that the
circular had become irrelevant subsequent to the judgement of the
Supreme Court in the case of Metlex (India) Ltd; it is pertinent to
note that CBEC has not withdrawn the said circular. He submits that
department did not cancel the registration, even though there was a
proposal for cancellation or revocation of the registration certificate in
5 SCNs; during the entire period of dispute M/s MEPL had paid central
excise duty and availed CENVAT credit on valid central excise
registration; hence, MEPL correctly availed the benefit of Notification
No. 56/2002-CE. He submits that the adjudicating authority has not
12 E/60538, 60611 & 60620/2024
even reduced an amount of Rs. 24,75,654/- from the total demand,
despite the decision by the Commissioner (Appeals), vide Order-in-
Original dated 22-06-2018, in the appellant's favour; this shows the
careless, casual and pre-determined nature of adjudication.
9. Learned Counsel submits that J&K High Court vide their order
dated 01-05-2023 disposed of the writ petition filed by MEPL in view
of the Order-in-Appeal dated 22-06-2018 passed by the
Commissioner (Appeals); it is also significant to note that it was the
counsel for the department who contended before J&K High Court
that the grievances of the petitioners stood redressed in terms of the
said order passed by Commissioner (Appeals); the acceptance by the
department's counsel mean that the issue had been finally settled
inter-se the parties i.e. the MEPL and the department; additionally,
the order of the Commissioner (Appeals) had been accepted by the
department; therefore, the issue of exigibility of the impugned goods
was finally settled inter-se the parties.; the adjudicating authority
was bound by order of the High Court and the order of the
Commissioner (Appeals). He submits that the dispute continued till
the Note 16 to Chapter 39 was amended w.e.f. 10-05-2008, though
ten show cause notices were pending for adjudication; Assistant
Commissioner passed an order rejecting the refund claim on 7-11-
2008 and at the same time issued a demand notice, for recovery of
the said refund claim; however, Commissioner (Appeals) dated the
issue, vide order 22-06-2018, in favour of the appellant, despite the
clarification, dated 11-9-2007, by CBIC to the appellant, that they are
not required to pay central excise duty in view of the judgment of
the Supreme Court in the case of Metlex (I) Pvt Ltd; department
13 E/60538, 60611 & 60620/2024
chose not to challenge the same; revenue also did not challenge the
orders passed by the 3 High courts, in the cases of Markwell Paper
Plast Pvt Ltd, Paper Products Ltd etc; therefore, the issue stands
finally settled inter se parties and it was not open for the
adjudicating authority to still confirm the demand and to deny
CENVAT credit; department cannot take a different stand in the same
case subsequent to a conscious decision to accept a contrary view;
such a policy would lead to confusion and places the assessee in a
jeopardy. He relies on
Reliance Jio Infocomm Ltd (2023) 3 Centax 96 (Tri-Bom).
Birla Corporation Ltd MANU/SC/2519/2005.
Bigen Industries Ltd 2006 (197) ELT 305 (SC).
Jayaswalas Neco Ltd 2006 (195) ELT 142 (SC).
Surcoat Paints (P) Ltd 2008 (232) ELT 4 (SC).
10. Learned Counsel submits that the adjudicating authority relied
upon 21 judgments which according to him followed Hon'ble Supreme
Court's judgment in the case of Metlex (India) Pvt Ltd (Supra); the
cases are in no way are applicable to the facts of the present case;
adjudicating authority has not applied the ratio of the judgement of
Metlex (India) Pvt Ltd itself correctly as explained above. He relies on
Islamic Academy of Education and others MANU/SC/0580/2003 and
Ispat Industries Ltd 2006 (202) ELT 561 (SC).
11. Learned Counsel submits that the adjudicating authority, in
addition to the alleged inadmissible refund/self-credit taken, also
confirmed the alleged wrongly availed and utilized the CENVAT credit,
finding that since the products manufactured by the appellants were
not excisable, they were not entitled to use the said CENVAT credit.
14 E/60538, 60611 & 60620/2024
Learned Counsel submits that Tribunal in the case of Markwell Paper
Plast Pvt Ltd (supra) has allowed the CENVAT credit to the party;
once it is held that the processes undertaken by the appellant
amounts to manufacture the same will automatically mean that the
appellants had rightly availed and used the CENVAT credit; denial of
CENVAT credit would amount to double taxation and hence, not-
permissible; moreover, once the department has accepted the
payment of duty on the finished goods, the question of denial of
CENVAT credit does not arise; no show cause was given to deny
credit and no authority held that the credit is liable to be reversed; it
was J&K High Court which had permitted them to pay the Central
Excise duty, though in the month of December, 2007, department was
issuing them the periodical show cause notices, the appellants were
asked not to pay duty only vide CBEC letter dated 11-09-2007 and by
superintendent vide letter dated 27-11-2007; department made no
serious attempt to refrain the appellants from paying central excise
duty or to cancel the registration, granted to them on 10-06-2004;
even otherwise it is apparently clear from the circular dated 07-11-
2007 that there was divergent practices which were prevailing in the
field as to whether lamination of printed plastic films amounted to
manufacture or not; further, the appellants in their writ petition had
brought on record invoices of 9 manufacturers who were paying
central excise duty on identical products; the appellants were paying
duty on packaging material and not on printed plastic laminates;
there was no circular or instructions that if the printed plastic
laminates are transferred or converted into packaging material the
assessee was still not required to pay central excise duty; the
15 E/60538, 60611 & 60620/2024
appellants were paying duty and were filing statutory monthly
returns; no objection was ever taken by the department at any stage;
therefore, once the department collected the central excise duty
subsequently they cannot turn around and contend or that the
appellants were not entitled to avail/utilise CENVAT credit; the issue
attained finality. Moreover, there is no Revenue Loss to the
Government. He relies on the following.
Creative Enterprises 2009 (235) ELT 785 (Guj)
upheld by the Apex Court 2009 (243) ELT A120
(SC).
Ajinkya Enterprises 2013 (294) ELT 203 (Bom).
Gravita Metals 2020 (372) ELT 172 (Tri. - Chan)
Shivali Udyog (I) Ltd 2006 (204) ELT 94 (Tri.-Del)
Coca-Cola India Pvt Ltd 2007 (213) ELT 490 (SC)
Narayan Polyplast 2005 (179) ELT 20 (SC).
12. Learned Counsel submits that the adjudicating authority has
rejected the self-credit of Rs. 6,45,840/- on the goods which were
returned, re-manufactured and re-sold after payment of appropriate
central excise duty; the appellants took credit in terms of Rule 16(1)
of the Central Excise Rules, 2002, when the goods were brought to
factory for being re-made, refined, re-conditioned or for any other
reason; the appellants having remanufactured and cleared the goods
again on payment of duty, are duly entitled for availing refund under
the provisions of Notification No. 56/2002-CE dated 14-11-2002. The
appellants rely on Order-in-Appeal dated 27-02-2013, passed on
identical issue; the order attained finality as the department did not
challenge the same before the Tribunal; further, the Tribunal in the
appellants' own case 2018 (364) ELT 1003 (Tri. - Chan) held that the
16 E/60538, 60611 & 60620/2024
Appellants followed the due procedure for return of goods and re-
clearance.
13. Learned Counsel submits that imposition of penalty under Rule
13/ Rule 15 of the CENVAT Credit Rules, 2005, apart from penalty
under Rule 27 of the Central Excise Rules, 2002, is not justified as
Rule 13 pertains to duty on matches and there are no CENVAT credit
Rules, 2005; penalty of Rs. 35,000, imposed under Rule 27 of the
Central Excise Rules, 2002, is wholly unsustainable as this is a
general penalty which can be imposed where no other penalty
provided under rules or in the Act and the maximum amount of
penalty can be imposed under this Rule as Rs. 5,000; further, the
show cause notice proposed equal penalty under Rule 13 and Rule 15
of CENVAT Credit Rules 2002 and 2004 respectively; these rules are
applicable only when CENVAT credit in respect of input or capital
goods has been taken or utilized wrongly on account of fraud, wilful
misstatement, collusion or suppression of fact, or contravention of
any of the provisions of the Excise Act or the Rules made thereunder
with intention to evade payment of duty; further, penalty under
Section 11AC can be invoked only when there is a demand under
proviso to Section 11A of the Act; proviso to section 11A of the Act
cannot be invoked even in a case where CENVAT credit has been
taken or utilised wrongly; it can be invoked only when there is a
proposal to deny the CENVAT credit or recover the same under
extended period of limitation; in the present case all the show cause
notices, except the one dated 05-05-2008, have been issued under
normal period of limitation; therefore, provisions of Rule 13(2)/Rule
15(2) of CENVAT Credit Rules 2002/ 2004 and provision of section
17 E/60538, 60611 & 60620/2024
11AC will also not come into play. He relies on H.M.M. Ltd 1995 (76)
ELT 497 (SC); Perfetti Van Melle India Pvt Ltd 2015 (323) ELT 149
(Tri-Del) upheld 2015 (323) ELT A29(P&H) and 2009 (235) ELT 850
(Tri-Del) and Flextronics Technologies (India) Pvt Ltd 2015 (323) ELT
273 (Kar)
Submissions on behalf of M/s FFC
14. Shri K.K. Anand, Learned Counsel for the appellants submits
that M/s FFC adopts all the submissions advanced by and on behalf of
M/s MEPL; further he submits that all the three manufacturers,
namely, M/s MEPL, M/s FFC and M/s ULPL challenged the decision of
the department that the processes undertaken by them do not
amount to manufacture, by filing individual writ petitions before
Hon'ble Jammu & Kashmir High Court; writ petition OWP No. 399/08
was filed by M/s FFC; On 01-05-2023, the Government counsel
stated that the grievance of the petitioners stood redressed in terms
of order dated 22-06-2018 passed by Commissioner (Appeals); in
view of the submissions advanced by the Government counsel, in the
case of M/s MEPL, which is equally applicable to the case of FFC as
the process of manufacture of MEPL and FFC are identical. He submits
that the High Court clearly gave two directions to the adjudicating
authority; firstly, that he shall consider the reply to the show cause
notice filed by M/s FFC & M/s ULPL and secondly, the matter shall be
decided purely on merit without being influenced by circular of CBEC
dated 07-11-2007; by giving direction to the adjudicating authority,
not to be influenced by the CBEC circular, and by implication the
Supreme Court judgment in Metlex case; adjudicating authority
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unfortunately did not follow both the directions of the High Court; he
did not consider the replies to the show cause notice in proper
perspective and relied upon solely, the Supreme Court judgment in
the case of Metlex (I) (P) Ltd though it was distinguished by the
Tribunal in the case of Markwell Paper Plast (P) Ltd & Paper Products
Ltd (supra); appellants submitted that the judgments in Markwell
Paper Plast Pvt Ltd and Paper Products Ltd were upheld by the three
different High Courts i.e. Delhi, Allahabad and Bombay; adjudicating
authority has committed a grave judicial indiscipline by not referring
the two High Court orders in his order; out of eight show cause
notices, there was proposal to revoke or cancel the central excise
registration of FFC in the first seven show cause notices; there is no
finding by the adjudicating authority on this issue meaning thereby
the central excise registration of FFC was always in operation.
Submissions on behalf of M/s ULPL
15. Shri K.K. Anand Learned Counsel for the appellants submits
that M/s ULPL adopts all the submissions advanced by M/s MEPL on
the issue that the processes undertaken by ULPL amount to
manufacture and they cannot be denied CENVAT credit and on other
issues; M/s ULPL adopts the submissions advanced by M/s FFC also in
respect of the order issued by the Hon'ble High Court of Jammu &
Kashmir, in respect of OWP No. 398/08 filed by M/s ULPL. He submits
that though both the show cause notices there was a proposal to
revoke or cancel the central excise registrations of M/s ULPL but there
is no finding by the adjudicating authority on this issue; by keeping
the Central Excise registration of ULPL in operation, department
19 E/60538, 60611 & 60620/2024
accepted indirectly that the appellants discharged Central Excise
duty and therefore, correctly availed the benefit of Notification No.
56/2002-CE dated 14-11-2002 and the CENVAT credit.
Submissions by Special Counsel for Revenue/ Respondent
16. Shri S.R. Prasad, Learned Special Counsel, for the Revenue
gives a brief of the case and raises a Preliminary objection that the
appellants filed single appeal against the common orders-in-original,
bearing different numbers equivalent to number of show cause
notices, passed in respect of multiple SCNs, which is not legal and
proper in terms of Rule 6A of the CESTAT Procedure Rules, 1982. He
replies on the various grounds taken by the appellants as under.
17. Learned Special Counsel submits that the adjudicating authority
has considered all submissions of the appellant and has discussed
most of the judgments and passed the impugned speaking orders
after granting personal hearing and following the principles of natural
justice. He submits that it is incorrect to say that the impugned
orders did not consider the OIA dated 22-06-2018 in the case of M/s.
Montage Enterprises Pvt Ltd. (MEPL), which has not been challenged
by the department; the AA has found that the said OIA dated
22.06.2018 was passed without taking cognizance of the decision of
Hon'ble Apex Court in the case of M/s. Metlex (I) Pvt Ltd; the OIA
incorrectly relied on the cases of Markwell Paper Plast Pvt Ltd, Paper
Products Ltd (supra); the decision in Markwell Paper Plast ignored the
specific verdict regarding non-emergence of a new product after
lamination of plastic films; further, the case of Laminated Packaging
(P) Ltd relied upon in Markwell case was about lamination of kraft
20 E/60538, 60611 & 60620/2024
paper, thus, distinguishable facts and circumstances; in the case in
hand, there is no printing of bare or metallized or laminated plastic
film, making it distinguishable from the case of Markwell Paper; in
Paper Products Ltd the issue involved was manufacture of packing
materials. He submits that in the following cases tribunal followed
judgment in Metlex India case.
Space Laminators 2017 (347) ELT 314 (T-Del)
Garware Polyester Ltd 2011 (271) ELT 434 (T-Mum)
Kaveri Metallising & Coating Ind P Ltd 2008 (228) ELT 122 (T-
Ahmd)
Universal Enterprises 2014 (310) ELT 789 (T-Mum)
Anil Dang Vs CCE Vapi 2007 (213) ELT 29 (T-LB)
S R Tissues Pvt Ltd 2005 (186) ELT 385 (SC)
18. He submits that in view of above decisions of the tribunal and
categorical favorable decision by Supreme Court in case of Metlex
India, the AA has not erred in not following the OIA of Commissioner
(Appeals), which was not legal and proper; moreover, the said OIA
was also not binding on him as the AA was also of the same cadre
and grade and not subordinate to the Commissioner (Appeals); the
cases cited by the appellants are not applicable; the acceptance of
the OIA, there too on monetary grounds, does not bind the
authorities as there is no application of Res judicata or Estoppel in
taxation matters. As held in J.K. Synthetics Ltd 1981 (8) ELT 328
(Del), department can depart from its earlier views in relation to
central excise with reference to tariff entries and process of
manufacture, if facts and circumstances change or if the process of
manufacture is changed or tariff entries undergo modification or if
judgements of higher courts necessitate modification. He relies on
21 E/60538, 60611 & 60620/2024
Hira Cement 2006 (194) ELT 257 (SC)
AGV Alfab Ltd 2011 (270) ELT 331 (Del)
Swaraj Mazda Ltd 1995 (77) ELT 505 (SC)
A B Mauri India P Ltd 2010 (260) ELT 424 (T-Mum)
GSFC Ltd 2014(312) ELT 139 (T-Ahmd)
19. Learned Special Counsel submits that the allegation that the AA
has completely ignored the proceedings, before the Hon'ble J&K High
Court, on the petitions preferred by the three appellants, is incorrect;
the High Court did not examine the merit of the case; the AA has also
not discussed anything about the said HC order in the impugned
orders, possibly because the same was not brought forward before
him at the time of adjudication; hence, the said HC order is of no
significance at this stage of proceedings especially when the verdict
of the SC in the case of Metlex India still hold good on the issue in
hand; moreover, the CBEC vide circular dated 07.11.2007 directed
the field formations to decide all pending cases in the light of the
judgment of SC in case of Metlex India Pvt Ltd; M/s MEPL were also
specifically written a letter dated 11.09.2007 by the Director CBEC,
asking them to stop the payment of Central excise duty on the said
final products as it did not amount to manufacture under Section 2(f)
of CE Act 1944; MEPL accordingly discontinued payment of CE duty
for the period from 21.09.2007 to 21.11.2007; they suo moto started
paying duty again from 22.11.2007 onwards.
20. Learned Special Counsel submits, on the allegation that though
the department had proposed revocation of Central Excise
registration but no proceedings were initiated to cancel the same;
22 E/60538, 60611 & 60620/2024
that the end product-flexible plastic laminates is a commercially new
and different commodity which has a different name, character and
use and on their reliance on J.G. Glass Industries 1998 (97) ELT 5
(SC) and other cases and Board Tariff Advice No. 40/82, dated
15.07.1982, that each process involved in production of the said
final product in their factory and the resultant product would decide
whether the same is yielding into a new article with distinctive name,
character and use; it was held by Hon'ble Supreme Court that the
processes of lamination of plastic films and cutting, slitting of the
same into smaller rolls applied by the appellants have not resulted
into any new article with distinctive name, character and use; the
case of J G Glass Industries in fact helps the departments case; he
also relies on Space Laminators 2017 (347) ELT 314 (T-Del); Tariff
Advice of 1982 given by CBEC would have been relevant at that
material time; cases of Kores India Ltd, Gramophone Company of
India Ltd 1999 (114) ELT 770 (SC) are not applicable being on
different set of facts; Appellant's reliance on the case of N.C.
Budharaja & co. 1994 Supp (1) SCC 280, is not applicable in view of
Delhi Cloth & General Mills - 1977 (1) E.L.T. (J 199) (S.C.).
21. Learned Special Counsel dismisses the argument of the appellant
that the judgment in the case of Metlex (I) Pvt Ltd. He submits that
the AA has elaborately discussed in the impugned orders and has
rightly held that the ratio of the Metlex India case is squarely
applicable to the case in hand which involved identical facts and
circumstances and that the processes employed by the appellants did
not result into manufacture of a new product; Hon'ble Apex Court
23 E/60538, 60611 & 60620/2024
considered entire process of lamination of films, tariff entries and
after considering the submissions of both parties and held
categorically that no process of manufacture has taken place and
therefore the appellant therein was held not liable to pay any duty on
the products. He submits that the appellant contend that Metlex case
did not involve process of slitting, cutting etc and therefore the
judgment is not applicable; the adjudicating authority rightly
observed that the film even after cutting and slitting remains film
only; the appellants failed to prove that the film after cutting/slitting,
has become something else than a film. He submits that the
appellant heavily relied upon Tribunal's decision in Kores India and
Paper Products Ltd; however, they were distinguished in Space
Laminators 2017 (347) ELT 314 (T-Del). He relies on decisions in
the following cases.
Garware Polyester Ltd 2011 (271) ELT 434 (T-Mum)
Kaveri Metallising & Coating Ind P Ltd 2008 (228)
ELT 122 (T-Ahmd)
Universal Enterprises 2014 (310) ELT 789 (T-Mum)
Anil Dang 2007 (213) ELT 29 (T-LB)
S R Tissues Pvt Ltd 2005 (186) ELT 385 (SC)
22. Learned Special Counsel submits that the plea based on change
of tariff heading from the input stage to final stage was dealt by the
adjudicating authority by relying on Markfed Vanaspati 2003 (153)
ELT 491 (SC) and Steel Strips 2003 (154) ELT 336 (SC) wherein it
was held that mere change in tariff heading does not amount to
manufacture; Even in case of Metlex India, it was held that the tariff
entry makes no distinction between ordinary film and film which is
24 E/60538, 60611 & 60620/2024
lacquered or metallized or laminated. He further relies on Tech
Industries 2003 (155) ELT 209 (SC), Rishabh Velveleen 1999 (114)
ELT 839 (T) and Fitrite Packers vs CCE 2006 (203) ELT 452 (T). He
submits that various cases were relied upon by the appellants. He
submits that the ratio of any decision must be understood in the
background of the facts of the case; Commissioner has rightly
rejected the reliance as the ratio was not applicable on facts.
23. Learned Special Counsel submits on the plea of Revenue
neutrality that his ground was not raised before the Commissioner
and hence, the same is not tenable before the Tribunal being an
additional ground; moreover, Revenue neutrality is no ground for
regularising the refund or set off illegally claimed in contravention of
the relevant law. Cases relied upon by the appellants involve peculiar
facts and circumstances mainly about availing of exemption vis-à-vis
credit, which is not the case here; the appellants have claimed
CENVAT credit on inputs used in the production of the said plastic
laminated films, which are not excisable; admissibility of credit is
subject to conditions prescribed under CENVAT Credit Rules,
2002/2004, as held in Punjab tractors Ltd 2005(181) ELT 380 (SC),
Dharampal Satyapal 2005 (183) ELT 241 (SC) and Mahindra &
Mahindra Ltd 2005 (179) ELT 21 (SC); appellant's reliance on the
cases of Coco cola India, Narmada Chamtur and Narayan Polyplast do
not help them as they are on different set of facts.
24. Learned Special Counsel rebuts the submission of the appellants
that the adjudicating authority could not have confirmed the demand
under section 11A, without challenging refund or self-credit orders/
assessment that this ground was not raised before commissioner;
25 E/60538, 60611 & 60620/2024
however, Section 11A specifically provides for recovery of erroneously
refunded amount of duty. He submits that it's incorrect to claim that
CENVAT credit is available as long as duty has been discharged on
final goods even if they are exempted. He relies on Swaraj Mazda Ltd
- 2004 (174) ELT 447 (T-Del) and Shree Ram packaging (2003) 151
ELT 640 (CEGAT); the cases relied upon by the appellants in this
regard reflect special facts and circumstances for which the credit was
allowed; the ratio cannot be applied.
25. On the submission of the appellants that the Adjudicating
Authority erred gravely in imposing equal amount of penalty under
Rule 13/15 of Central Excise Rules, 2002/ 2005 and penalty under
Rule 27 of the Central Excise Rules, 2002, Learned Special Counsel
submits that OIO, in case of MEPL, categorically recorded that penalty
under Rule 27 has been proposed in the SCNs for violation of the
provisions of Notification No. 56/2002-CE; appellant violated the
provisions of said notification and therefore is liable to penalty under
Rule 27 of the CE Rules, 2002; Adjudicating Authority imposed
maximum penalty @ 5000 per SCN; similarly, as the appellants
availed CENVAT credit with a mala fide intent to pass it on to its
customers while availing inadmissible benefit of the exemption
notification No. 56/2002, have rendered themselves liable for penal
action under Rule 13/15 of CCR 2002/2004; Adjudicating Authority
was conscious and did not impose penalty under Rule 15, for the
period July 2004 to December 2006; wrong quoting of the provisions,
in the operative portion of the Order, is a mere typographical error,
which could no way vitiate the proceedings.
26 E/60538, 60611 & 60620/2024
26. Learned Special Counsel rebuts the submission of the appellants
on the demand of interest and submits that as the demand is
sustainable on merit, the interest liability in terms of section 11AA or
11AB of CE Act, 1944 get automatically attracted. On the issue of
denial of CENVAT credit on the goods retuned for repair etc, which
were claimed to have been re-made and cleared on payment of duty
that Adjudicating Authority categorically recorded that the appellants
had failed to give any evidence to counter the allegations; as the
goods were subjected to re-packing only, the said request was
rejected correctly. Regarding the submission of M/s FFC and M/s ULPL
that the show Cause Notices, issued for the periods December 2003
to January 2005 and March 2004 to January 2005, respectively are
time-barred, Learned Special Counsel submits that Adjudicating
Authority has dealt with this contention in the respective OIOs in a
legal and proper manner.
Additional Written Submissions by Learned Special Counsel
27. Shri Shyam Raj Prasad, Learned Special Counsel, for the
respondent department submitted additional submissions, dated
31.7.2025, on the specific issues raised by the appellants, in the
following manner.
27.1. Appellants' Reliance on the Order-in-appeal dated
22.06.2018: Learned Special Counsel submits that the Order-in-
appeal dated 22.06.2018 passed in the matter of MEPL relates to
refund/self-credit of CE duty paid; whereas, the instant case involves
the period from July 2004 to November 2008, including one show
cause notice issued for recovery of refund/self-credit of Rs.
24,75,654, for the month of October, 2007; acceptance of a solitary
27 E/60538, 60611 & 60620/2024
case of October 2007, shall not take away the right of the Revenue
department from agitating the cases for the entire period on merits;
it is not the case of the appellants that the Adjudicating Authority as
subordinate to Commissioner (Appeals), therefore, the order binding
on him; further, the impugned order is based upon Supreme Court
judgment in case of Metlex India, involving identical issue relating to
plastic films only, which cannot be brushed aside only on the ground
that the department did not challenge the solitary said OIA; there is
no estoppel in taxation matters and department cannot be stopped
from contesting the case in the interest of justice and fair play; he
relies on Hon'ble Supreme Court's decision in the case of Government
of West Bengal Vs Tarun K. Roy and others [(2004) 1 SCC 347] and
CCE Raipur vs Hira Cement 2006 (194) ELT 257 (SC); it was held
similarly, in a case of dispute of classification, in A. B. Mauri India Pvt
Ltd 2010 (260) ELT 424 (T-Mum) [upheld 2011 (271) E.L.T. A35
(S.C.)] that there is no estoppel/res-judicata in taxation matters and
if revenue was able to adduce adequate evidence in support of
classification as claimed by them, that claim had to be determined
independently.
27.2. He submits that the Delhi High Court in the case of J.K.
Synthetics Ltd. v. Union of India, 1981 (8) ELT 328 (Del) laid
down the principles as to when the Department would depart from its
earlier views in relation to central excise with reference to tariff
entries and process of manufacture and is applicable to the facts of
the present case. Learned Special Counsel relies on
J.K. Synthetics Ltd. v. Union of India, 1981 (8) ELT
328 (Del)
28 E/60538, 60611 & 60620/2024
AGV Alfab Ltd Vs CCE Delhi-II 2011 (270) ELT 331
(Del)
Swaraj Mazda Ltd Vs CCE Chandigarh 1995 (77) ELT
505 (SC)
GSFC Ltd Vs CCE Vadodara 2014 (312) ELT 139 (T-
Ahmd)
27.3. He submits that the cases cited by the appellants involve
distinguishable facts and circumstances and hence, are not squarely
applicable to the case on hand. He analyses each case and submits as
follows.
in the case of Tikitar Industries 2012 (277) ELT 149 (SC) all the
three OIA were passed on the same date 16.05.1997 and
probably for this reason Apex court upheld holding the orders of
the Tribunal on merit.
cases of Sambhaji Vs Gangabai & Mangalore Chemicals &
Fertilizers Ltd relate to interpretation of statute and exemption;
the cases of Pearl Insulations Pvt Ltd and Dynaspede Integrated
Systems Ltd deal with the benefit of exemption notification vis-
à-vis conditions;
the case of Kamlakshi Finance Corporation Ltd - 1991 (55) ELT
433 (SC) about principles of judicial discipline, which has not
been flouted in this case, as the Commissioner has followed the
law laid down by the Supreme Court in the case of Metlex
India;
the case of Reliance Jio Infocom Ltd 2023 (3) Centax 96 (T-
Mum) in fact supports the case as the Tribunal held that there is
no res-judicata in taxation matters and proceeded to decide the
29 E/60538, 60611 & 60620/2024
case on merits despite the fact that the department accepted
OIA dated 31.01.2018.
in the case Birla Corporation Ltd MANU/SC/2519/2005, the
department had consciously decided not to pursue the decision
in case of Pepsico Holdings relating to the issue of Modvat
admissibility as a decision was taken by the Government
accordingly.
in Biggen Industries 2006 (197) ELT 305 (SC), the earlier
decision for the same period was not challenged and therefore
the department was precluded from taking a different stand; in
the instant case, the OIA relates to period October 2007 and
the impugned orders involve period a different period;
the cases of Jayaswal's Neco Ltd and Surcoat Paints P Ltd
involve acceptance of the Tribunal's order by the department
which decided the issues on merit and not involving the order of
the Commissioner Appeals;
the case of Reliance Jio Infocom Ltd 2022-TIOL-708 (T-
Mumbai), was not dismissed on the grounds that the
department had accepted the Commissioner (Appeals)
Hyderabad's order, instead it was examined on merits.
28. Non-following of the Orders of Hon'ble J & K High Court's
orders: Learned Special Counsel submits that in respect of M/s
MEPL, Hon'ble High Court's order dated 01.05.2023, was after the
Counsel for the department conceded that the said OIA has redressed
the grievances of the petitioner. He submits that the J & K High Court
however, did not pass any order on writ petitions filed by M/s FFC
30 E/60538, 60611 & 60620/2024
and M/s ULPL; it disposed of the writ petitions with directions that the
same is not sustainable at show cause stage as the petitioner has
filed reply to the SCN issued to them and matter is pending
adjudication. He submits that the Adjudicating authority has
accordingly decided the cases on merits. He submits that J & K High
Court, vide order dated 01.05.2023, in the case of MEPL, did not
decide the issue on merit; it did not hold that the show cause notices
to be invalid or not sustainable.
29. Revenue Neutrality: Learned Special Counsel submits that
Hon'ble Supreme Court in the case of Northern Operating Systems
Pvt Ltd 2022 (61) GSTL 129 (SC) held that the incidence of taxation,
is entirely removed from whether, when and to what extent,
Parliament chooses to recover the amount. In view of this, the case
of Coca-Cola India Pvt Ltd, relied upon by the appellants gets
distinguished by the ratio of Northern Operating Systems; the case of
Narayan Polyplast 2005 (179) ELT 20 (SC) was held to be merely
technical and without any revenue implication and thus, not
applicable to the instant case.
Counsel for the appellants Reply to departments submissions
30. Shri K. K. Anand, Learned Counsel for the appellants submitted a
written reply, dated 27.08.2025, in reply to the arguments advanced
by the Learned Special Counsel, for the Revenue, during course of
the hearing on 23.07.2025 and written submissions. He submits that
Special Counsel's averment that Commissioner (Appeal) passed the
order, dated 22.06.2018, without taking cognizance of the decision of
the Apex Court in the case of Metlex India Private Limited is
incorrect; Special Counsel ignored the fact that the said decision was
31 E/60538, 60611 & 60620/2024
distinguished by tribunal in more than one case and 3 High Courts
have upheld the same; he also ignored the fact that J&K High Court
disposed of the petitions filed by the appellants on the assurance by
Government Counsel that the grievance of the appellants is mitigated
by the order passed by Commissioner (Appeal).
30.1. Learned Counsel for the appellants submits that the Special
Counsel also ignored the fact that the Hon'ble J&K High Court
disposed the petitions and with a direction to Adjudicating Authority
to decide the issue not being influenced by the CBEC Circular; the
Adjudicating Authority did not even make a whisper about the
applicability or otherwise of the decision of the Tribunal in the cases
of M/s Markwell Paper Products and M/s Paper Products; Learned
Special Counsel submits that the order of Commissioner (Appeals),
dated 22.06.2018, was accepted on monetary grounds as per
litigation policy and not on merits; however, the said policy also laid
down that no appeal shall be filed where the assessee has acted in
accordance with long standing practice and because of the change of
opinion on part of the jurisdictional officers; department also
accepted the orders in M/s Markwell Paper Products and M/s Paper
Product; therefore, there was no scope for the Adjudicating Authority
not to follow the law laid down by the Tribunal in these cases; the
process of manufacture in the case of M/s MPPPL and the impugned
case herein is identical and the final product is also identical; in both
the cases, as a result of the processes undertaken, on the film, a new
product known in the market as "Packaging Material" emerges and
thus the process amounts to manufacture. Learned Counsel submits
that the judgement of 3 High Courts needs to be followed, when the
32 E/60538, 60611 & 60620/2024
judgment of Supreme Court was distinguished on facts. He relies on
Dipsy Chemicals Private Limited & Other reported in 1987 (32) ELT
556 and Rapidpur (India) Ltd 1987 (27) ELT 222 (Bom). He submits
that the judgements relied upon by the special counsel are of no help
as these were either rendered prior to the judgments relied upon by
the appellants or distinguishable on facts.
30.2. Learned Counsel for the appellants submits that the Special
Counsel's statement, that the order of the Commissioner(A) is not
binding on the Adjudicating Authority, is fallacious; it was duly
binding as the said OIA was based on two Tribunal judgments which
had been upheld by three High Courts; two judgments passed by the
Delhi High Court were accepted by the Department; the said OIA was
accepted by the very same officer, the Adjudicating Authority
himself, in the capacity of administrative commissioner.
31. Learned Counsel for the appellants submits that the Special
Counsel contends wrongly that Hon'ble J&K High Court orders
passed in the cases of MEPL, FFC and ULPL, stating that the same
was not maintainable at SCN stage dated 01.05.2023, passed in the
case of has no consequence at this stage and the verdict of the
Supreme Court in Metlex holds good. Learned Counsel submits that
the above submissions are wholly unsustainable as the orders passed
by the Hon'ble J & K High Court were misread; as far as MEPL is
concerned they had challenged the letter dated 27.11.2007 issued by
the office of Superintendent of CE Range -II Jammu, directing MEPL
not to pay Central Excise Duty; Hon'ble High Court vide interim order,
dated 29.12.2007, had allowed MEPL to pay Central Excise Duty; M/s
ULPL and M/s FFC challenged the CBEC Circular dated 07.11.2007, in
33 E/60538, 60611 & 60620/2024
which it was directed to decide all the pending cases in light of the
judgment of the Hon'ble SC in the case of Metlex India Pvt Ltd;
31.1. He submits that during the pendency of the Writ Petitions, the
Commissioner (Appeals) allowed the appeal of MEPL, in the case of
demand for October 2007, relying upon two judgment of the Tribunal
rendered in the case of MPPPL and PPL; in both these cases the
judgment of the Hon'ble SC in the case of Metlex India Pvt Ltd was
distinguished; these two judgments were upheld by three High Courts
namely Delhi, Allahabad & Bombay; the order of the Commissioner
(Appeals) dated 22.06.2018 was also accepted by the department;
while deciding the writ petition regarding MEPL, department's
counsel, submitted that the grievance of the petitioner stands
redressed in terms of order dated 22.06.2018; accordingly, Hon'ble J
& K High Court disposed of the Writ Petition; the petitions filed by M/s
FFC and M/s ULPL, both challenging the CBEC Circular dated
07.11.2007, were disposed of with a direction to the Adjudicating
Authority to consider the reply to the SCN submitted by the
petitioners, along with all the evidences, documentary or otherwise,
purely on merits without being influenced by the CBEC circular
07.11.2007.; this direction has not been carried out by the
Adjudicating Authority; it is to be noted that the CBEC Circular dated
07.11.2007 was based on the Hon'ble Supreme Court's judgment in
the case of Metlex India Pvt. Ltd; once the HC had given a direction
that the Adjudicating Authority is not be influenced by CBEC Circular
dated 07.11.2007, it would also mean that he was also not to be
influenced by the Hon'ble SC judgment in the case of Metlex India Pvt
Ltd; the appellants, in their written replies, distinguished the case of
34 E/60538, 60611 & 60620/2024
Metlex India Pvt Ltd and placed reliance on the order of the
Commissioner (Appeals) dated 22.06.2018, which was accepted by
the department.
32. Learned Counsel for the appellants submits that the appellants
had stated that once the order of the Commissioner (Appeals) was not
challenged on merits by the department the same had attained
finality; it is a well settled law that when on a particular issue the
department had taken a conscious decision to accept the principles
laid down in an order, it cannot be permitted to take an opposite stand
in another case more specially when the earlier order pertained to the
intervening period of the same party; otherwise, law will be in a state
of confusion placing both the authorities and assessees in jeopardy.
He submits that the appellants placed reliance on some judgments,
Special Counsel sought to distinguish the cases, in an inappropriate
and in a legally not acceptable manner; for example, Special Counsel's
distinguishing Bigen Industries Ltd. 2006 (197) ELT 308 (SC) is
incorrect as October 2007 is common to both impugned order and the
OIA.
33. Learned Counsel for the appellants submits that the Special
Counsel has advanced a submission that there is no application of
res-judicata or estoppel in taxation matters and relied upon a number
of cases. In this regard he has placed reliance on the following
judgments and according to him the department can depart from
their earlier views in relation to Central Excise, Tariff entries and
process of manufacture (i) If the facts are different or further and
fresh facts are brought on record; or (ii) if the process of
35 E/60538, 60611 & 60620/2024
manufacture has changed (this was a central excise case); or (iii if
the relevant entries in the Tariff have undergone a modification; or
(iv) if, subsequent to the earlier decision, there has been a
pronouncement of a High Court or the Supreme which necessitates
reconsideration of the issue the earlier adjudication order was not
reviewed by the department could not per se preclude them from
taking contrary decision based on independent evidence and on its
own merit as per legal development.
33.1. Learned Counsel submits that all the above four circumstances
under which department can depart from their earlier views are
conspicuous by its absence in the present appeals; department has
not brought on any fresh facts on record; the process of manufacture
has remained the same ; there is no change or modification in the
Tariff items during the entire period of dispute; no contrary High
Court of Supreme Court judgment has been pronounced subsequent
to pronouncement of two judgments by this Hon'ble Tribunal in the
case of MPPPL and PPL, which were upheld by three different High
Courts; judgments pronounced by the Delhi High Court in the case of
M/s. Sheetal Mercantile (P) Ltd and M/s. Chawla Packaging were
accepted by the department. Therefore, in these circumstances the
principle of res-judicata will very well apply in the present appeals.
He submits that the six judgments, relied upon by the Ld. Special
Counsel, are either distinguishable or are in favour of the Appellants.
33.2. Learned Counsel reiterates the cases on which the appellants
would wish to rely; he submits that it was held in Radha Soami
Satsang Manu/SC/0061/ 1992 "We are aware of the fact that strictly
speaking res judicata does not apply to income tax proceedings.
36 E/60538, 60611 & 60620/2024
Again, each assessment year being a unit, what is decided in one
year may not apply in the following year but where a fundamental
aspect permeating through the different assessment years has been
found as a fact one way or the other and parties have allowed that
position to be sustained by not challenging the order, it would not be
at all appropriate to allow the position to be changed in a subsequent
year". He further relies on Godrej & Boyce Manufacturing Company
Ltd. (2017) taxmann.com 111 (SC); Parashuram Pottery Works Co
Ltd MANU/SC/0250/ 1976 etc and submits that since in the present
case the issue already stands settled in favour of the appellants
principle of res judicata will apply.
33.3. Learned Counsel submits that the appellants relied upon
Kamlakshi Finance Corporation (supra) wherein, it was laid down that
the subordinate authorities are to unreservedly to follow the judgment
of Tribunal and superior courts; the argument of the Ld. Special
Counsel, that in the present case the Adjudicating Authority has
followed the law laid down by the Supreme Court in the case of Metlex
India as against the OIA passed by a equal rank officer, is wholly
flawed; Adjudicating Authority was required to follow the law laid
down by Tribunal and upheld by High Courts in the cases of M/s MPPPL
and M/s PPL and more so as the Commissioner (Appeals), in his order
dated 22.06.2018, followed the decision of the Tribunal and the
department had accepted the order of the Commissioner (Appeals)
34. Learned Counsel submits that Learned Special Counsel did not
rebut their submissions on admissibility of the CENVAT Credit; the
Adjudicating Authority has denied the CENVAT Credit to all the three
37 E/60538, 60611 & 60620/2024
appellants on the ground that the processes undertaken by them did
not amount to manufacture; in the cases of M/s MPPPL and M/s PPL,
which they relied upon, Tribunal did not only hold that the processes
undertaken by the parties therein amounted to manufacture but also
allowed CENVAT Credit to the parties; these cases being on identical
facts should be followed.
35. Heard both sides and perused the Records of the case. The issues
before us to decide in the instant case are
(i). Whether the processes undertaken by the appellants to make
Plastic Laminates falling under Chapter Sub-heading No. 3920.37,
3920.38 and 3920.32 of the First Schedule to the Central Excise Tariff
Act, 1985, amount to manufacture?
(ii). Whether the appellants were correct in availing the benefit of
notification No. 56/2002-CE dated 14-11-2002?
(iii). Whether the Revenue can take a different view having accepted
the Commissioner (Appeals) order dated 22.06.2018, passed in
favour of the appellants?
(iv). Whether the department ignored the directions given by the
Hon'ble J& K High Court while disposing the Writ Petitions filed by the
appellants?
(v). Whether Revenue could have issued Show Cause Notices to
recover the allegedly wrongly availed self -Credit in terms of the
notification No. 56/2002-CE dated 14-11-2002, without a challenge
to the assessment orders.
(vi). Whether the appellants are eligible to take CENVAT Credit?
38 E/60538, 60611 & 60620/2024
(vi). Whether M/s MEPL were right in availing self-credit on goods,
retuned by Customers, which were re-made and cleared on payment
of duty again.
36. In order to decide whether the processes undertaken by the
appellants amount to manufacture, it is required to see the
manufacturing process. The appellants submit that the raw material
required for the manufacture are Polyethylene Films &
Printed/Unprinted/Metallized/Unmetallized Plastic films in rolls falling
under tariff heading 3920.32 & 3920.31/32/35/36/39 of CETA
respectively, Adhesives falling under Chapter 35.06, Thinners falling
under Chapter 38.14 and Paper/Reel Core falling under Chapter 48.22
which is used as consumables. The manufacturing process involves
gluing and pasting of two or more layers of different plastic materials
of which one of the materials is printed plastic film; in many
industries such as Gutkha industry, food industry polyester film is
also glued and pasted with at least two other layers of printed plastic
laminate and other plastic laminates, in order to keep the packed
material air tight so that they don't get spoiled by atmospheric air,
moisture and microorganisms; the printed plastic laminates obtained
by them is in jumbo rolls, which are kept for 24 hours in hot room to
enable the bonding of poly film with plastic film; thereafter the
processes of slitting, cutting and packing of jumbo rolls of printed
plastic laminates, are undertaken; the finished goods are used as a
packaging material in the various industries such as pan masala,
gutkha and fast moving consumer goods (FMCG) such as tea, coffee,
namkeen, sweet, food products, rice, ghee, oil, milk, pulses etc; the
appellants manufacture packaging material, especially on the orders
39 E/60538, 60611 & 60620/2024
from these industries; therefore, one layer is of printed lamination
which contains brand name of a particular customer with the details
of that particular product.
36.1. We find that the impugned orders reject the claim of the
appellants on the allegation that the processes did not amount to
manufacture as held by Hon'ble Supreme Court in the cases of Metlex
(India) Private Ltd. The Assistant Commissioner, vide order in
Original dated 7.11.2008, while rejecting the refund, claimed by, i.e.
M/s Montage Enterprises(P) Ltd (one of the appellants herein), finds
as follows.
3. I have carefully gone through the case records. I note that
the verification/eligibility report was called for from jurisdictional
Range Officer, who vide its report C. No.GL-6(58)J/R-
II/MEPL/Refd/06/1812 dated 26/10/2007 has confirmed that the
scrutiny of the documents and the manufacturing process of the
party revealed that the party is engaged in the process of
Lamination of Plastic Film falling under Chapter Heading No.3920
of the Tariff. The assessee is procuring duty paid printed /
unprinted / metallized /un-metallized plastic/polyester film in
rolls, poly film in rolls and adhesive as their main inputs and
laminate the poly film with the plastic/polyester film by applying
solventless adhesive on the laminating machine. After lamination
process, the material packed in Jumbo rolls form and kept for 24
hours in hot room to strengthen the bounding of poly film and
printed/un-printed film. Then the rolls are slit into small sizes as
per the requirement of the Customers. The input used by the
party are duty paid film in roll form and it remains as such after
the process of lamination and slitting. No new distinct product
comes into existence as per their manufacturing process. It
appears that it doesn't tantamount to manufacture in terms of
Section 2 9f) of the central Excise Act,1944. The Hon'ble Supreme
Court in the case of Meltex (India) (P) Ltd. Vs Commissioner of
Central Excise, New Delhi 2004 (165) ELT 129 (SC) has held that
laminating/metallizing of duty paid film does not amount to
40 E/60538, 60611 & 60620/2024
manufacture as the product is a film to start with and remains a
film after lamination or metallization. Though a note has been
inserted in Chapter 39 so as to provide that in respect of goods
falling under heading 3920 & 3921, the process of metallization
shall amount to manufacture but nothing has been mentioned
about lamination. Thus, lamination process does not cover as
manufacturing process under Section 2 (f) of central Excise Act,
1944. Since the process undertaken by the party does not appear
to tantamount to manufacture in terms of Central Excise Act and
as such Central Excise duty is not leviable on the goods produced
by the subject party. The party vide their letter dated 21/09/2007
has supplied a copy of Board's letter vide F.No.93/01/2006-CX-3
dated 11/09/2007 where under their claim for Levy of Excise
Duty on Printed Plastics Laminates falling under Ch.39 has been
rejected. The Board's letter clearly shows that the manufacturing
process of M/s Montage Enterprises (P) Ltd does not amount to
manufacture.
36.2. We find that the findings in the impugned orders are similar to
the above. The authorities find that the appellants are engaged in
lamination and slitting/cutting only; both these processes do not
amount to manufacture; as per M/s Metlex (India) (P) Ltd (Supra)
and the clarification, dated 11.09.2007, issued by CBEC, lamination
does not amount to manufacture and as per S.R. Foils Ltd 2001(138)
ELT 719(Tri-Del) slitting/cutting jumbo rolls of aluminum foil into
smaller rolls followed by rewinding on card board core and repacking
does not amount to manufacture. We find that the impugned orders
did not analyse the processes undertaken by the appellants therein in
the case of M/s Meltex (India) (P) Ltd (Supra) and have not made
any attempts to compare the same with the processes involved in the
impugned cases.
41 E/60538, 60611 & 60620/2024
36.3. We find that the Revenue mainly depends on the decision of
Hon'ble Apex Court in the case of M/s Metlex (I) Pvt Ltd (Supra). We
find that that Supreme Court observed, in that case, as follows.
15. In this case the Appellants purchase duty paid film. They
merely laminate or metallize it. The product is a film to start
with and remains a film after process of lamination or
metallization. Thus, there is no new distinct product which has
come into existence and it would have to be concluded that
there is no manufacture.
16. It was however submitted that the case has proceeded on
the admitted footing that there was a manufacture. It was
submitted that the matter must be remitted back to decide
whether there is manufacture. It was submitted that this aspect
will have to be decided in terms of Note 12 to Chapter 39 and
after looking at the process adopted by the Appellants. It was
submitted that under the present Tariff there are separate sub-
heading and thus after examining the process of the Appellants
it may be possible to contend that a new and distinct product
has come into existence.
17. We are unable to accept this submission. The question is
whether an individual and distinct product has come into
existence. It is settled law that the burden is on the department
to prove that a new and distinct product has come into
existence. The Appellants, in reply to the Show Cause Notice,
took up the contention that there was no manufacture. If the
Department still wanted to contend that manufacture had been
undertaken, the Department had to prove it by cogent evidence.
The Tribunal was clearly in error in seeking to cast the burden
on the Appellants to show that there was no process of
manufacture.
36.4. We find that the Commissioner (Appeals) while overturning the order
passed by the Assistant Commissioner, as above, vide order dated 22-06-
2018, finds that:
The SC judgement in the case of Metlex (I) Pvt Ltd vs CCE 2004
(165) ELT129 (SC) which has been made a basis by the
42 E/60538, 60611 & 60620/2024
respondent for issuing SCN to appellant has been distinguished in
the following judgements of the Tribunal-
(a) 2012 (285) E.L.T. 76 (Tri, - Del.) CESTAT, Principal
Bench, New Delhi in case of Markwell Paper Plast Pvt.
Ltd Versus Commr. of Cus. & C. Ex., Noida Final Order
Nos. 711-714/2012-EX(BR)(PB), dated 14-6-2012 in
Appeal Nos. B/L644/2009, E/45/2010 and B/3059 &
3036/2009-
...................
In Para 20 and 21, the CESTAT has gone into the following deliberation-
"The manufacturing appellants have explained the process of production of their final products as follows: -
(i) Printing of bare and metalized polyester film which is purchased from the market on payment of duly:
(ii) Lamination of said printed film either in two layers or three layers with the help of adhesive or other chemical:
This fact is not refuted by the department. Thus, it is clear that the appellant after purchasing the bare polyester/metalized film on payment of duty, first subjects that film to printing as per the requirement of the customer and thereafter those films are laminated either in to two layers or three layers. In our considered view the aforesaid process changes the character of the bare polyester film (inputs) in terms of its user as also the thickness and lamination. Therefore, this process falls within the definition of manufacture as defined under Section 24) of the Central Excise Act, 1944. In our aforesaid view we are supported by the judgment of the Supreme Court in the matter of Laminated Packaging: (P) Ltd. (supra) wherein the Supreme Court has held that polyethylene laminated kraft paper. produced out of lamination on duty paid 43 E/60538, 60611 & 60620/2024 kraft paper with polyethylene amounts to manufacture."
..................................
(b) The above decision of CESTAT has been followed in 2014 (304) E.L.T. 145 (Tri. - Mumbai) CESTAT, West Zonal Bench, Mumbai in case of Paper Products Ltd Versus Commissioner of Central Excise, Mumbai-III Final Order No. A/1040/2013-WZB/C-I1(ÉB), dated 12- 11-2013 in Appeal No. B/21/2009-MUM.
............................................. 36.5. We find that the Principal Bench in the case involving Markwell Paper Plast Pvt Ltd, M/s. Sheetal Mercantile (P) Ltd and M/s Chawla Packaging (supra) distinguished the judgement of the Hon'ble Apex Court on the basis of the facts of the cases. Bench held that
19. In para 15 of the judgment, the Supreme Court has observed that mere lamination or metallization of a film does not bring about a new distinct product as such said process cannot be termed as manufacture. In para 16 of the judgment, the Supreme Court has referred to the plea of the department urging for remand of the case back for decision whether or not there was manufacture. In para 17, the Supreme Court rejected the said plea of the department observing that if the department wanted to contend that the assessee has undertaken manufacture, the department was required to prove it by cogent evidence and that the Tribunal was clearly in error in seeking to cast the burden on the assessee to show that there was no process of manufacture. From these observations, it is clear that the appeal of the assessee was allowed by the Supreme Court on facts because of the failure of the department to establish that the goods in question came into existence through a manufacturing process. That being the case in our considered view the judgment of Supreme Court in Metlex (I) Pvt. Ltd. cannot be applied universally de hors the facts. Whenever the question arises whether or not the product in question came into being from a process of manufacture the adjudicating authority is required to refer to the facts of the case to come to the conclusion as to whether the process amounted to 44 E/60538, 60611 & 60620/2024 manufacture or not. In the instant case the Commissioner (Appeals) has not cared to look into the process through which the finished goods were cleared by the manufacturing assessees emerge out of the process of manufacture.
20. The manufacturing appellants have explained the process of production of their final products as follows :-
(i) Printing of bare and metallised polyester film which is purchased from the market on payment of duty;
(ii) Lamination of said printed film either in two layers or three layers with the help of adhesive or other chemical.
21. This fact is not refuted by the department. Thus, it is clear that the appellant after purchasing the bare polyester/metallised film on payment of duty, first subject that film to printing as per the requirement of the customer and thereafter those films are laminated either in two layers or three layers. In our considered view the aforesaid process changes the character of the bare polyester film (inputs) in terms of its user as also the thickness and lamination. Therefore, this process falls within the definition of manufacture as defined under Section 2(f) of the Central Excise Act, 1944. In our aforesaid view we are supported by the judgment of the Supreme Court in the matter of Laminated Packaging (P) Ltd. (supra) wherein the Supreme Court has held that polyethylene laminated kraft paper produced out of lamination on duty paid kraft paper with polyethylene amounts to manufacture. The relevant observations of Supreme Court are reproduced thus :-
"4. After this impugned Act was passed, the same was challenged before the Bombay High Court by several writ petitions. Writ Petition No. 623 of 1979 along with others were disposed of by the Bombay High Court by judgment delivered by the division bench on 16/17th June, 1983 in the case of New Shakti Dye works Pvt. Ltd. & Mahalakshmi Dyeing and Printing Works v. Union of India & Anr. [1983 E.L.T. 1736 (Bom.)]. By the said judgment, the Bombay High Court disposed of 24 writ petitions as the question involved in all those petitions was identical. In that case the constitutional validity of the impugned 45 E/60538, 60611 & 60620/2024 Act as well as the levy of duty on certain goods identical to the present goods involved in this application under Article 32 of the Constitution was involved. The Bombay High Court dismissed the said writ petitions. We will refer to the said decision later. We may, however, state that we are in respectful agreement with the conclusions as well as the reasoning of the decision of the Bombay High Court in the said petitions. Special leave to appeal to this Court has been granted from the said decision in the case of New Shakti Dye Pvt Ltd. [1983 E.L.T. 1736 (Bom)]."
36.6. We find that the above case was followed by Mumbai Bench in the case of Paper Products (Supra). The above cases were carried to respective High Courts and were upheld by the High Courts and Revenue did not file any appeals against the same and thus, it is argued that they have become final. We find that Hon'ble Delhi High Court in the case of Sheetal Mercantile (P) Ltd 2015 (315) ELT 540 (Del.), while dismissing the appeal filed by revenue held that
7. Thereafter, the Tribunal has referred to the process of production adopted by the respondent. The respondent first print bare or metalized polyester film purchased from the market i.e. the inputs, (it is not disputed that the price paid includes excise duty). Thereafter, printed films were laminated either in two layers or three layers with the help of adhesive or another chemical. After referring to the process adopted by the respondent, the Tribunal has held that this would be covered by the definition of manufacture under Section 2(f) of the Central Excise Act, 1944. The Tribunal has relied upon the judgment of the Supreme Court in the case of Laminated Packings (P.) Ltd. v. CCE - 1990 (49) E.L.T. 326 (S.C.).
8. The process actually undertaken, as recorded by the Tribunal, is not disputed.
9. In light of aforesaid background, facts found relating to the process undertaken and the reasoning adopted/referred to by the tribunal, we do not think any substantial question of law arises for 46 E/60538, 60611 & 60620/2024 consideration. Perhaps the appellant should be satisfied with the reasoning.
36.7. We find that Hon'ble Allahabad High Court, while deciding the Revenue appeal in respect of Principal Bench's Order in Markwell Paper Plast P Ltd 2018 (9) G.S.T.L. 176 (All) held that the impugned order of the CESTAT has the stamp of approval of the Delhi High Court and there is no new ground of attack in this appeal. Once the very impugned order has been affirmed by another High Court, we do not find any reason to interfere with the same in this appeal.
37. We find from the above, that the Principal Bench, in the above cases, has distinguished the decision of the apex Court in the case of Metlex. The Bench finds that though the Supreme Court has observed that mere lamination or metallization of a film does not bring about a new distinct product, as such said process cannot be termed as manufacture, Hon'ble Supreme Court was referring to the plea of the department urging for remand of the case back for decision whether or not there was manufacture; in that context Hon'ble Apex Court held that the onus was on the department to prove by cogent evidence that there was manufacture and that the tribunal was clearly in error (in the case of Metlex) in seeking to cast the burden on the assessee to show that there was no process of manufacture. We find that Co-ordinate Bench further held that the judgment of Supreme Court in Metlex (I) Pvt Ltd cannot be applied universally de hors the facts. We find that as held by Hon'ble Apex Court, ibid, whenever the question arises whether or not the product in question came into being from a process of manufacture the 47 E/60538, 60611 & 60620/2024 adjudicating authority is required to refer to the facts of the case to come to the conclusion as to whether the process amounted to manufacture or not. We find that that the Mumbai Bench followed the judgement in the case of Markwell Products, while deciding the case of Paper Products. We further find that that the decision of the Tribunal was upheld by the respective High Courts and Revenue did not challenge the same.
38. We find that the appellants are transforming laminated/metallised plastic sheets in to packing material. In the worst scenario, it can be said that they are undertaking a process incidental or ancillary to production of packing material. Section 2(f) of Central Excise Act,1944 provides that manufacture includes any process incidental or ancillary to the completion of a manufactured product. CBEC clarified, vide Letter F. No. 4/3/2006-CX.1, dated 19-6-2006, that a number of department and private publications of Central Excise Act, 1944 published from time to time after 1986 contain/contained an extra word 'and' at the end of the Section 2(f)(i) and before 2(f)(ii). It is clarified that as per the official Gazette there is no word 'and' between Section 2(f)(i) and 2(f)(ii). Now if we examine the Section 2(f)(i) which reads that "manufacture" includes any process, incidental or ancillary to the completion of a manufactured product, which means that if a goods has been manufactured and any activity is done thereon for completion of the activity for further use, it shall amount to manufacture. Tribunal relied on this circular in the case of Jindal Stainless Steel Way Ltd 2014 (310) E.L.T. 194 (Tri. - Mumbai). .
48 E/60538, 60611 & 60620/2024
39. We find that the processes involved in the impugned cases are not that of mere lamination. Two or more layers are glued together and left in a hot room so that they bond together better. One of the layers is the one which bears the details of the product, the manufacturer etc and the thus the laminated sheet becomes roll of packaging material, which is further slit and cut to desired sizes. What emerges in the impugned cases is not just a laminated film but a packaging material there too of a particular customer/ manufacturer, on whose orders the same were manufactured. The end product does not remain a mere laminated film. A definite, distinct new product emerges as a result of the processes undertaken by the appellants. The new product has a distinct name, character and use in comparison with the raw-material which is laminated/metallised sheet. Moreover, the new product that emerges, that is the packaging material, is not only different from the raw material used, unlike in the case of Metlex, but also it ceases to be a laminate for general use and can only be used by the particular customer/manufacturer, who ordered for the same. That being the case, we are of the considered opinion that the facts of the impugned case being different, the ratio of judgment of Supreme Court in Metlex (I) Pvt Ltd is not applicable. Further, we find that Hon'ble Supreme Court of India, in the case of CCE, Bangalore v. Srikumar Agencies - 2008 (232) ELT 577 (S.C.) held that one additional or different fact may make a world of difference between conclusions in two cases; disposal of cases by blindly placing reliance on a decision is not proper. Hon'ble Court also quoted the words of Lord Denning in this, who said "Each case depends on its own facts and a close 49 E/60538, 60611 & 60620/2024 similarity between one case and another is not enough because even a single significant detail may alter the entire aspect in deciding such cases, one should avoid the temptation to decide cases (as said by Cordozo) by matching the colour of one case against the colour of another. To decide therefore, on which side of the line a case falls, the broad resemblance to another case is not at all decisive.
40. Therefore, the ratio of any decision must be understood in the background of the facts of the case. We find that the Hon'ble Supreme Court, in the case of Metlex (I) Pvt Ltd was concerned with the question of availability of exemption under Notification No.53/88-CE to the goods; the revenue took the plea that the process therein amounted to manufacture. Hon'ble Court held that mere lamination does not amount to manufacture; the onus to prove, with evidence, that the process amounted to manufacture was on the Revenue and that the adjudicating authority is required to refer to the facts of the case to come to the conclusion as to whether the process amounted to manufacture or not. The processes undertaken by the appellants herein are more akin to those undertaken in the case of M/s Markwell Products. In view of the above, we find that the ratio of the decision in Metlex(I) Pvt Ltd is not applicable to the distinguishable case on the facts. In view of the subsequent decisions of the tribunal upheld by three High Courts, in cases whose facts are identical to those of the impugned cases, we find that the processes undertaken by the appellants amount to manufacture. We find that the impugned order was in correct in relying on the decision of OIO No. 27/Commr/Noida/2010-11 dated 15-02-2011, consequent to the 50 E/60538, 60611 & 60620/2024 remand by Supreme Court in the case of Kuwer Industries Ltd reported in 2011 (274) ELT A81 (SC).
41. We find that Learned Special Counsel for Revenue relied upon (i). Space Laminators 2017 (347) ELT 314 (T-Del) (ii). Garware Polyester Ltd. Vs. CCE Nasik 2011 (271) ELT 434 (T-Mum) (iii). Kaveri Metallising & Coating India Pvt. Limited Vs. CCE Ahmedabad 2008 (228) ELT 122 (T-Ahm) (iv). Universal Enterprises 2014 (310) ELT 789 (T-Mum) (v). Anil Dang Vs. CCE Vapi 2007 (213) ELT 29 (T-LB) and (vi). S.R. Tissue Pvt Ltd. 2005 (186) ELT 385 (SC). Learned Counsel for the appellants submits that the these are not applicable as they are distinguishable on facts; judgments listed at serial no (ii) ,(iii), and (v) were rendered prior to the judgments rendered in the case of MPPPL and PPL; judgment mentioned at serial no 1(i) & (iv) the law laid down in the case of MPPPL was not brought to the notice of the Hon'ble Bench. We find that the department took quite opposite stand, in different cases, on the same issue. In some cases, they pleaded that the processes involved amounted to manufacture. In some cases, it submits that they did not amount to manufacture. Thus, we find that the decision of the Tribunal in M/s Markwell and M/s Paper products has attained finality being approved by the High Courts and not being appealed against by Revenue. Moreover, Learned Commissioner (Appeals), vide order dated 22-06- 2018, in respect of one of the appellants themselves, decided the issue in favour of the appellants, for the same impugned period. The order was accepted by the department. Therefore, we find that the processes undertaken by the appellants in converting laminated/ 51 E/60538, 60611 & 60620/2024 metallised laminates in to packaging material, amounts to manufacture. As far as the availment of the benefit of Notification No. 56/2002, the only objection by Revenue was that the processes undertaken by the appellants did not amount to manufacture. No other case has been made out regarding the eligibility. As the only reason, for denial of the benefit of the Notification, is set to rest in favour of the appellants, we find that there was no infirmity in the availment of the benefit of Notification No. 56/2002 by the appellants. Thus, we find that the questions raised at (i) and (ii) Para 35 above are answered in the affirmative in favour of the appellants.
42. Coming to the question (iii) at Para 35 above, as to whether the Revenue can take a different view having accepted the Commissioner (Appeals) order dated 22.06.2018, passed in favour of the appellants, we find that the Appellants argue that as the order dated 22-06- 2018, passed by the Learned Commissioner (Appeals) has been accepted by the department, Revenue can not take a different stand in the present proceedings. Learned Special Counsel for the Revenue submits that the said order has been accepted on monetary grounds and not on merit and hence, it has no precedent value. Learned Special Counsel submits that the principles of Res Judicata and Estoppel do not apply to taxation matters.
43. We find that the appellants relied upon the judgment of the Hon'ble Supreme Court in the case of Bigen Industries Ltd 2006 (197) ELT 308 (SC); Hon'ble SC has categorically held the decision of the Tribunal, on the same issue and for the same parties' case on the 52 E/60538, 60611 & 60620/2024 same facts, for the earlier period, attained finality as Revenue did not file any further appeal. Supreme Court held as under.
10. The adjudicating authority as well as the Commissioner (Appeals) have proceeded on the basis as if the order passed by the Trade Mark Registry registering the trade mark in favour of the assessee is erroneous and of no consequence. The Tribunal is right in observing that once the trade mark has been registered in the name of the assessee by the statutory authority authorised to do so recognizing the assessee to be the sole proprietor of the trade mark for India, the adjudicating authority as well as the Commissioner (Appeals) erred in denying the benefit of the notification under consideration. This apart, the earlier decision of the Tribunal in Bigen Industries (supra) between the parties on the same facts for the period from 12th August, 1989 to 25th August, 1989 having attained finality, as the Revenue did not file any further appeal, the Revenue is precluded from taking a different stand in the present appeals as per law laid down by this Court in a catena of cases. [See Collector of Central Excise, Pune v. Tata Engineering & Locomotives Co. Ltd. reported in (2003) 11 SCC 193; Berger Paints India Limited v. Commissioner of Income Tax, Calcutta reported in (2004) 12 SCC 42; Birla Corporation Limited v. Commissioner of Central Excise reported in (2005) 6 SCC 95 = 2005 (186) E.L.T. 266 (S.C.); and Jayaswals Neco Limited v. Commissioner of Central Excise, Nagpur reported in 2006 (195) E.L.T. 142 (S.C.)]
44. Though, it has been generally accepted that the principles of Res judicata or Estoppel are not applicable to taxation matters, the application should be with a proper reasoning and if the circumstances so demand. Delhi High Court in the case of J.K. Synthetics Ltd 1981 (8) ELT 328 (Del) laid down the following 53 E/60538, 60611 & 60620/2024 principles as to when the Department could depart from its earlier views.
(i) If the facts are different or further and fresh facts are brought on record or
(ii) if the process of manufacture has changed (this was a central excise case) or
(iii) if the relevant entries in the Tariff have undergone a modification; or
(iv) if, subsequent to the earlier decision, there has been a pronouncement of a High Court or the Supreme which necessitates reconsideration of the issue. Further, fact that the earlier adjudication order was not reviewed by the department could not per se preclude them from taking contrary decision based on independent evidence and on its own merit as per legal development.
45. We find that in the instant case, none of the above criteria is present. It is not the case of the department that the stand taken earlier is being revised due to certain changes. It is not open for the department to change the stand after they have accepted the decision of the Commissioner (Appeals) for the same period in respect of one of the appellants and the decision of the Tribunal in cases of Markwell Paper Plast Pvt Ltd, M/s. Sheetal Mercantile (P) Ltd and M/s Chawla Packaging (supra) with identical facts. The principle of Res Judicata and Estoppel would apply if a decision is changed for the future, but not certainly for the past period having accepted a contrary stand in the interregnum. Changing the stand off and on would result in avoidable confusion and chaos in the field of taxation.
54 E/60538, 60611 & 60620/2024 It is clear from some of the cases relied upon by the Revenue that it was the department which was taking the stand that lamination of laminated or metallised film amounts to manufacture. Under such circumstances only Hon'ble apex Court held in Metlex case that the onus is on the revenue to prove with evidence to show that the processes undertaken amount to manufacture. Moreover, the instant cases are of not mere lamination but something beyond which makes the films a packaging material for particular manufacturer/s.
46. We find that in the instant case we have before us an order of the Commissioner (Appeals) in the case of one of the appellants themselves and the decision of tribunal in 3-4 cases involving processes identical to those undertaken by the appellants. Learned Special Counsel for the Revenue contends that the Commissioner (Appeals) order relates to October 2007 and the impugned order involves a totally different period and therefore this decision cannot be applied. We find that the submission is factually incorrect. We find that the period involved in the Commissioner (Appeals) order is subsumed in the impugned order. We also find that the argument of the learned Special Counsel that in the present case the Adjudicating Authority has followed the law laid down by the Supreme Court in the case of Metlex India as against the OIA passed by an equal rank officer, is not correct. We find that Adjudicating Authority was required to follow the law laid down by Tribunal, in the cases of M/s MPPPL and M/s PPL, which was upheld by three High Courts and more so as the Commissioner (Appeals), in his order dated 22.06.2018, followed the decision of the Tribunal and the department had accepted the order of the Commissioner (Appeals).
55 E/60538, 60611 & 60620/2024
47. Further, the issue of classification or excisability of goods has to be uniform and cannot depend upon a particular period unless there is a change in law. Therefore, we find merit in the plea of the appellants that Revenue is precluded from taking a different stand in the present appeals as per law laid down by Courts and Tribunal in a catena of cases. Further, we find that Hon'ble Apex Court in the case of Jaiswals NECO- 2006 (195) ELT 142 (SC) held that the Tribunal is bound by the decision of a Coordinate Bench and the only option in case it wants to differ is to refer to a larger Bench. In the instant case we have the precedence of judgments by two coordinate Benches upheld by 3 High Courts. Therefore, we are bound by the decision in the cases of M/s Markwell and M/s Paper products by two coordinate Benches. In the case of Reliance Jio Infocom Ltd. 2023 (3) CENTAX 96 (T-Mum), tribunal held that Commissionerate at Mumbai is bound by the order of the Commissioner (Appeal) in Hyderabad in an identical case. The order of the Tribunal was upheld by the Hon'ble Supreme Court. In the instant case we have not only an order of the Commissioner (Appeals) in the case of the appellants themselves and decision of two coordinate Benches of the Tribunal in identical case. All the decisions were accepted by department. For these reasons too, we find that department is bound by the above decisions and this Bench needs to follow the same. Thus, we answer the Question framed at (iii) of Para 35 above, in the negative.
48. Now, we turn our attention to the question, No (iv) at Para 35 above, as to whether the department ignored the directions given by the Hon'ble J& K High Court while disposing the Writ Petitions filed by 56 E/60538, 60611 & 60620/2024 the appellants? The fact that the appellants approached the Hon'ble J&K High Court during the pendency of the proceedings. Hon'ble J&K High Court disposed of the Writ Petition No. 398/2008 filed by M/s Montage Enterprises, by order dated 01.05.2023, observing that It is Contended by Mr Jagpaul Singh, Learned Counsel for the respondents that the grievance of the petitioner stands redressed in terms of order dated 22.06.2018 passed by Commissioner (Appeal) and in terms of response to RTI application. Similarly, the Hon'ble high Court disposed of the Writ Petitions filed by the other appellants i.e. M/s. First Flexipack Corporation (WP No. 398) and M/s. Ultra Laminates Pvt Ltd No (WP No. 399), vide order dated 19.07.2023, directing as below.
4. Having heard learned counsel for the parties and perused the material on record, we are of the view that no writ lies against the show-cause notice, more particularly, when the petitioner has already responded to the show-cause notice by submitting his reply to it. The apprehension of the petitioner that the Assessing Authority may not adjudicate their reply to show cause notice on merits in view of the circular of C.B.E.C. dated 07.11.2007 can be taken care of by providing that the Assessing Authority which is seized of the matter shall consider the reply to the show-cause notice submitted by the petitioner along with all evidences, documentary or otherwise, purely on merits without being influenced by the circular of C.B.E.C, dated 07.11.2007. Ordered accordingly.
49. On going through the orders, it is clear the writ petition filed by M/s Montage Enterprises was disposed of on the basis of the assurance given by the Revenue Counsel that the grievance of the appellant is redressed by passing the order by Commissioner 57 E/60538, 60611 & 60620/2024 (Appeals) on 22-6-2018. It is clear that the Hon'ble Court was given to understand that the grievance of the appellant stands redressed and there is nothing against the appellant. On the contrary, the adjudicating authority has not followed the order and has clearly ignored the assurance given to the Hon'ble Court. In the case of other appellants, Hon'ble High Court directed that the adjudicating authority shall decide the case on merits without being influenced by the circular dated 07.11.2007. As the circular was issued on the basis of the Hon'ble Supreme Court's decision in the case of Metlex, Hon'ble High Court appears to have indicated that the circular and the thus, the decision in the case of Metlex, per se have no applicability to the facts of the cases before them. We find that in spite of the direction of the Hon'ble High Court, the adjudicating authority failed to appreciate the facts of the impugned cases in a just and fair way as an independent adjudicator, it appears that the Authority was pre- determined to follow the circular rather than the high Court's order. Thus, we are in agreement with the submissions of the counsel for the appellants and answer the question framed at (iv) at Para 35 above in the affirmative.
50. Coming to the question whether Revenue could have issued Show Cause Notices to recover the allegedly wrongly availed self -Credit in terms of the notification No. 56/2002-CE dated 14-11-2002, without a challenge to the assessment orders, we find that the learned counsel for the appellants submits that the appellants have taken self-credit and submitted to the department accordingly, on a month to month basis; revenue has not challenged these orders in terms of Section 35E(2) of the Central Excise Act, 1944 and hence such refund 58 E/60538, 60611 & 60620/2024 could have not been recovered in terms of Section 11A ibid. On the other hand, learned Special Counsel rebuts the submission of the appellants that the adjudicating authority could not have confirmed the demand under section 11A, without challenging refund or self- credit orders/ assessment that this ground was not raised before commissioner; however, Section 11A specifically provides for recovery of erroneously refunded amount of duty.
51. We find that in the instance case, the appellants availed the benefit of notification 56/2002, dated 14.11.2002. The Notification provides for the manner in which the exemption shall be given to effect, as follows.
2. The exemption contained in this notification shall be given effect to in the following manner, namely: -
(a)The manufacturer shall submit a statement of the duty paid, other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002, to the Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, by the 7th day of the next month in which the duty has been paid
(b). The Assistant Commissioner of Central Excise or Deputy Commissioner of Central Excise, as the case may be, after such verification, as may be deemed necessary, shall refund the amount of duty paid, other than the amount of duty paid by utilization of CENVAT credit under the CENVAT Credit Rules, 2002, during the month under consideration to the manufacturer by the 15th day of the next month. Provided that in cases, where the exemption contained in this notification is not applicable to some of the goods produced by a manufacturer, such refund shall not exceed the amount of duty paid less the amount of the CENVAT Credit availed of, in respect of the duty paid on the inputs used in or in relation to the manufacture of goods cleared under this notification
(c) If there is likely to be any delay in the verification, the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall refund 59 E/60538, 60611 & 60620/2024 the amount on provisional basis by the 15th day of the next month to the month under consideration, and thereafter may adjust the amount of refund by such amount as may be necessary in the subsequent refunds admissible to the manufacturer.
51.1. An amendment has been brought by Notification Number 65/2003 dated 6.8.2003, inserting 2A under the Notification. Section 2(A)(g) provides that
(g) the amount of the credit availed irregularly or availed of in excess of the amount determined correctly refundable under clause
(e) and not reversed by the manufacturer within the period specified in that clause, shall be recoverable as if it is a recovery of duty of excise erroneously refunded. In case such irregular or excess credit is utilised for payment of excise duty on clearances of excisable goods, the said goods should be considered to have been cleared without payment of duty to the extent of utilisation of such irregular or excess credit.
52. We find that Section 2A(g) of the Notification provides that the amount of the credit availed irregularly or availed of in excess of the amount determined correctly refundable under clause (e) and not reversed by the manufacturer within the period specified in that clause, shall be recoverable as if it is a recovery of duty of excise erroneously refunded. There is no record put forth by the revenue if any notice was given to the appellants to repay the same. The only occasion the Assistant Commissioner passed an order rejecting the refund was set aside by the Commissioner (Appeals) for a period of one month. Therefore, for the entire impugned period the refund availed by the appellants remains unchallenged. Though, erroneously refunded amounts can be recovered in terms of Section 11A, no authority has held that the refunds availed are erroneous, on a 60 E/60538, 60611 & 60620/2024 challenge to the order of assessment or self-assessment, as the case may be. Recourse to the provisions of Section 11A cannot be taken, without challenging the order of assessment/ self-assessment, as held by Hon'ble Apex Court in the cases of ITC Ltd- 2019 (368) ELT 216 (SC); Priya Blue Industries Ltd.- 2004 (172) ELT 145 (SC); Flock (India) Pvt Ltd.- 2000 (120) ELT 285 (SC) etc. Hon'ble Delhi High Court held similarly in the case of BT (India) Pvt Ltd in WP (C) 13968/2021, vide order dated 20.09.2023, which was followed by the Principal Bench of this Tribunal in the case of M/s Kalyan Toll Infrastructure vide final order, dated 29.04.2024, in ST/51625/2018 (Del.).
53. We find that J&K High Court, while interpreting the applicability of Section 11A vis-a-vis the very same Notification 56/2002, held in the case of Krishi Rasayan Exports Pvt Ltd, in CEA No. 06/2018, has taken a similar Stand. Hon'ble high Court held that The refund of excise duty claimed by an assessee and sanctioned by the competent Authority vide its order under Notification No. 56 of 2002-CE which order has attained finality as not having been challenged before any appellate or revisional authority under the Excise Act cannot be termed as 'erroneous refund' and recovered by resorting to Section 11A of the Act. Hon'ble J&K court followed the decision of Hon'ble High Court of Guwahati in the case of Jellalpore Tea Estate2011 (268) E.L.T. 14 (Gau.). Hon'ble High Court of Guwahati was dealing with a similar Notification No. 33/99-CE, issued for North-Eastern Areas of the Country, held that:
12. ...................
61 E/60538, 60611 & 60620/2024 A bare reading of Section 11A of the Act indicates that power can be exercised only if duty has not been levied or paid or has been short-levied etc. "on the basis of any approval, acceptance or assessment relating to the rate of duty on or valuation of excisable goods under any other provisions of this Act". Insofar as the present case is concerned, the only issue that arose for consideration was whether the assessee was entitled to the benefit of Notification No. 33/99-C.E., dated 8-7-99. There was no issue of any approval, acceptance or assessment relating to the rate of duty nor was there any issue relating to the valuation of any excisable goods. Ex-facie, therefore, Section 11A of the Act was inapplicable to the facts of the case.
54. Hon'ble High Court of Tripura, in the case of Tripura Ispat (A unit of Lohia Group), in WP(C) No.465 of 2020, held that
13. If the department was aggrieved by the refund order passed by the Assistant Commissioner, it was open for the department to file appeal against such order as is provided in Section 35 of the Central Excise Act, 1944. It is well settled that under section 35 even the department can be stated to the person aggrieved against an order that the competent authority may pass. Thus, the order of assessing officer is open to challenge at the hands of the department under Central Excise Act, unlike in case of Income Tax Act, 1961 where the assessing officer's order of assessment cannot be appealed against by the department and a limited review is available under Section 263 of the Income Tax Act, 1961.
55. In the light of the above judgements, we are of the considered opinion that it is not open to the department to proceed with recovery of the so called' erroneous refund' unless the order of assessment or self-assessment as the case may be is appealed against under the provisions of Section 35 of Central Excise Act,1944, provisions of Section 11 cannot be invoked. That is to say unless a competent authority terms the refund granted or taken on their own as 62 E/60538, 60611 & 60620/2024 'erroneous refund', department cannot proceed to recover the same under the provisions of Section 11A ibid. We find that the rebuttal submitted by the Special Counsel for the Revenue that the appellant has not raised this issue in their written submissions or before the adjudicating authority is not acceptable. We hold that the point being related to the interpretation of Law, can be raised by the appellants at any point of time during the proceedings. Thus, the question raised at (iv) of Para 35, as above, is answered in the negative.
56. Now we proceed to discuss the questions at (v) and (vi) of Para 35, as above, as to whether the appellants are eligible to take CENVAT Credit and as to whether M/s MEPL were right in availing self-credit on goods, retuned by Customers, which were re-made and cleared on payment of duty again. We find that the learned Counsel for the appellants submits that the appellants were paying duty and were filing statutory monthly returns; no objection was ever taken by the department at any stage; therefore, once the department collected the central excise duty subsequently, they cannot turn around and contend or that the appellants were not entitled to avail/utilise CENVAT credit. He relies on various case laws. We also find that the learned counsel submits as regards the self-credit of Rs. 6,45,840, availed on the goods which were returned, re- manufactured and re-sold after payment of appropriate central excise duty, that Rule 16(1) of the Central Excise Rules, 2002provides for such return; the appellants having remanufactured and cleared the goods again on payment of duty, are duly entitled for availing refund under the provisions of Notification No. 56/2002-CE dated 14-11- 2002; the department, vide Order-in-Appeal dated 27-02-2013, 63 E/60538, 60611 & 60620/2024 passed on identical issue, allowed the same; the order attained finality as the department did not challenge the same; further, this Bench in appellants (M/s MEPL) own case 2018 (364) ELT 1003 (Tri.
- Chan) held that the Appellants followed the due procedure for return of goods and re-clearance.
57. We have gone through the cases relied upon by the appellants. It is held in a number of cases that when the final product is cleared on payment of duty, CENVAT credit would be available, if otherwise eligible. The impugned order seeks to deny CENVAT Credit for the reason that the processes undertaken by the appellants do not amount to manufacture. In view of the discussion in preceding Paras, we find that the processes involved in converting laminated/ metallised sheets in to packing material, by the appellants herein, amount to manufacture. The department has not alleged any other reasons for denial of credit. Therefore, we find that the appellants are eligible to avail CENVAT Credit and the denial of the same is not maintainable. We find that this Bench, in the case of Gravitas Metals 2020 (372) ELT 172 (Tri. - Chan), while dealing with same notification No. 56/2002-CE dated 14-11-2002, decided the issue in favour of the appellants. We find that the revenue's therein was that the appellant therein was not entitled for the benefit of notification No. 56/2002-CE on the ground that the process of making refined lead ingots and lead alloys, did not amount to manufacture. We find that the Bench, relying on the judgement of the Bombay High Court in the case of Ajinkya Enterprises (supra), held that in case of activity does not amount to manufacture, the payment of duty shall amount of reversal of CENVAT credit. We find that Commissioner had allowed 64 E/60538, 60611 & 60620/2024 the CENVAT credit to the party which has been upheld by the Tribunal. Thus, the questions at (v) and (vi) of Para 35, as above, are answered in the affirmative.
58. In view of the above discussion, we find that all the issues raised are answered in favour of the appellants and therefore, we are of the considered opinion that the impugned orders are not sustainable. Accordingly, we set aside the same and allow the appeals.
(Order pronounced in the open court on 08/10/2025) (S. S. GARG) MEMBER (JUDICIAL) (P. ANJANI KUMAR) MEMBER (TECHNICAL) PK