2009 (9) TMI 864 - AT - Central Excise

Summary

Issues involved: Challenge to order confirming demand under Rule 6(3)(b) of Cenvat Credit Rules, 2004 and imposition of penalty.

Summary:
The appellant challenged the order confirming a demand of Rs. 63,74,221 under Rule 6(3)(b) of Cenvat Credit Rules, 2004, and imposition of a penalty of Rs. 40 lakhs. The demand was based on the contention that the appellants were not entitled to avail cenvat credit for inputs used in the final product, as it was not dutiable. The appellant argued that they had been paying duty on the finished products and were availing credit for duty paid inputs. The appellant cited legal precedents to support their case, while the respondent relied on a decision of the Bombay High Court. The Tribunal considered various legal interpretations and observed that the issue of whether lamination/metalisation amounts to manufacture depends on the specific facts of each case. The Tribunal granted a stay on the execution of the impugned order and waived the pre-deposit requirement until the appeal's disposal, noting that a prima facie case had been made by the appellant.

The decision highlighted the importance of factual context in determining whether a process amounts to manufacture for duty liability. Legal precedents were cited to support both the appellant's and respondent's arguments regarding the nature of lamination and metalisation processes. The Tribunal emphasized the need to consider whether the activity results in a product commercially distinct from the raw materials used. The Tribunal differentiated between cases where duty had been paid on final products and cases where no evidence of distinct commercial properties was presented. Ultimately, the Tribunal granted a stay on the execution of the order and waived the pre-deposit requirement, acknowledging the evolving legal interpretations and the appellant's compliance with duty payment obligations.