2008 (1) TMI 666 - AT - Central Excise

Summary

Issues:
1. Eligibility of CENVAT credit on inputs used in the manufacture of printed bottles for export.
2. Denial of credit by lower authorities.
3. Interpretation of Chapter Note regarding the process of printing, decorating, or ornamenting as "manufacture."

Analysis:
The case involved an appeal by M/s. Glaxo SmithKline Consumer Healthcare Ltd. (GSCHL) seeking waiver of pre-deposit of a demand and penalty imposed on them. GSCHL received Horlicks in bulk, repacked them in bottles, and exported printed bottles to Srilanka. The dispute arose over the eligibility of CENVAT credit amounting to Rs. 7,85,293/- availed by GSCHL on inputs used in the manufacture of printed bottles for export during 2004-2005. Lower authorities held the credit irregularly availed as the materials did not go into the final product as required by the CENVAT Credit Rules, 2004 (CVR).

The appellant argued that as a manufacturer exporter, they should not be denied credit as merchant exporters are granted rebate of duty paid on inputs. They contended that the exported items fell under a specific category in the Central Excise Tariff Act and the process undertaken constituted manufacturing as per Chapter Note 6. The appellant sought to set aside the impugned order.

The respondent, however, pointed out that the process of manufacture was not adequately presented before the lower authorities to justify the entitlement to credit. They suggested remanding the matter for a fresh decision considering the lack of clarity on the process involved.

The tribunal analyzed the case records and submissions. It noted that the export goods were manufactured by the appellants as per the Chapter Note specifying that the process of printing, decorating, or ornamenting amounts to "manufacture." The tribunal found the denial of credit unsustainable based on the legal position. However, acknowledging the lack of argumentation on this aspect before lower authorities and the unknown process details, the tribunal decided to remand the case for a fresh decision by the original authority. The impugned order was set aside, and the appeal was allowed by way of remand, granting the assessee an opportunity to present their case adequately before the adjudicating authority.