2009 (11) TMI 783 - AT - Central Excise

Summary

Issues:
1. Availment of Cenvat credit on corrugated boxes
2. Discharge of duty liability on pet jars
3. Denial of credit by Revenue
4. Procedural lapses in credit availing process

Analysis:
1. Availment of Cenvat credit on corrugated boxes:
The Appellate Tribunal addressed the issue of whether the appellant correctly availed Cenvat credit on corrugated boxes. The appellant, a contract manufacturer of confectionery, purchased pet jars and corrugated boxes from different manufacturers. The pet jar manufacturer included the cost of corrugated boxes in the invoice for duty payment. The appellant claimed Cenvat credit on duty paid by the pet jar manufacturer for both pet jars and corrugated boxes. The Revenue contended that the credit on corrugated boxes should not have been availed twice. However, the Tribunal found that the duty paid by the pet jar manufacturer was for the pet jars, not the corrugated boxes. The Tribunal also noted that the appellant followed a common industry practice, and previous decisions supported the appellant's position. Therefore, the Tribunal held that the credit availed on the corrugated boxes was valid.

2. Discharge of duty liability on pet jars:
The appellant discharged duty liability on the pet jars, including the cost of corrugated boxes as per Central Excise Law. The appellant argued that the duty paid on pet jars covered the entire packaging, including the corrugated boxes. The Tribunal agreed with the appellant's interpretation, stating that the duty paid by the pet jar manufacturer was correctly included in the invoice. The Tribunal emphasized that the duty liability was for the pet jars, and the inclusion of packing costs was in compliance with the law.

3. Denial of credit by Revenue:
The Revenue denied the credit on corrugated boxes, claiming that they were not directly received by the appellant. However, the Tribunal found that the appellant received the corrugated boxes along with the pet jars, and the credit was based on valid invoices issued by the manufacturer. The Tribunal rejected the Revenue's argument and upheld the appellant's right to claim credit on the corrugated boxes.

4. Procedural lapses in credit availing process:
The Tribunal acknowledged procedural lapses in the appellant's method of availing credit on corrugated boxes. According to the Cenvat Credit Rules, the appellant should have received the boxes directly and issued invoices to the pet jar manufacturer. Despite this procedural deviation, the Tribunal held that the substantial benefit of Cenvat credit should not be denied due to minor procedural errors. Citing previous judgments, the Tribunal emphasized that the duty collection by the department was not affected by the procedural lapses. Therefore, the Tribunal waived the pre-deposit requirement and allowed the appeals, setting aside the impugned order.

In conclusion, the Appellate Tribunal ruled in favor of the appellant, finding that the credit availed on the corrugated boxes was valid, the duty liability on pet jars was correctly discharged, and the procedural lapses did not warrant denial of the substantial benefit of Cenvat credit.