2012 (7) TMI 878 - AT - Central Excise

Waiver of pre deposit - CENVAT Credit - credit on the excise duty paid in respect of the inputs for printed laminated sheets. - Held that - The Department has all through been accepting the excise duty without protest. Therefore prima facie after accepting the excise duty the department now cannot be allowed to take a plea that the appellant has wrongly availed Cenvat credit as inputs on final product is not acceptable. Otherwise also since the appellant has paid excise duty on final product which is much more than the Cenvat credit availed entire excise duty is revenue neutral. Hon ble Gujarat High Court in case of C.C.E. v. Creative Enterprises reported in 2008 (7) TMI 311 - GUJARAT HIGH COURT has held that if duty has been collected by the Department on a final product manufactured by an assessee the Cenvat credit has to be allowed and the same cannot be subsequently denied on the ground that the process does not amount to manufacture. This judgment has been upheld by the Apex Court vide judgment reported in 2009 (7) TMI 1206 - SUPREME COURT . That being the case prima facie we do not find any merit in the plea of the department that since the process undertaken by the appellant does not amount to manufacture the Cenvat credit availed by the appellant is liable to be recovered from them. Thus we find it is a fit case in favour of the appellant to justify the waiver of condition of pre-deposit of duty demand. - Decided in favour of assessee.

Summary

Issues: Application for waiver of pre-deposit of duty demand.

Analysis:
1. The appellant sought a waiver of the pre-deposit condition of the duty demand of Rs. 10,51,06,739/- with interest and an equal amount of penalty as a pre-condition of hearing the appeal.
2. The appellant, engaged in the manufacture of biscuits, produced printed laminated wrappers in their factory. These wrappers were used both captively and cleared to contract manufacturing units on payment of excise duty, with Cenvat credit being availed on the inputs used for the printed laminated sheets.
3. The department contended that as per the judgment in Metlex (I) Pvt. Ltd. v. CCE, New Delhi, no excise duty was payable on the printed wrappers as the process of printing and laminating a plain polyester film did not amount to manufacture. Consequently, a show cause notice was issued seeking recovery of Cenvat credit availed on inputs used in making printed laminated sheets.
4. The appellant argued that they had consistently paid excise duty on the laminated wrappers cleared to contract manufacturing units, with duty paid exceeding the Cenvat credit availed. The appellant contended that even if lamination was not considered as manufacture, there was no justification for recovering Cenvat credit when duty had been paid on the laminated sheets.
5. The advocate for the appellant urged the waiver of the pre-deposit condition, emphasizing a strong prima facie case. In contrast, the Revenue's representative opposed the stay application, supporting the Commissioner's decision to disallow the Cenvat credit.
6. The Tribunal found merit in the appellant's arguments, noting that the goods in question were cleared by the appellant on payment of excise duty, which had been consistently accepted by the Department. Citing precedent, the Tribunal held that if duty had been collected on the final product, Cenvat credit had to be allowed and could not be subsequently denied on the grounds that the process did not amount to manufacture. Consequently, the Tribunal allowed the stay application, waiving the pre-deposit condition of duty demand, interest, and penalty.

Conclusion:
The Tribunal, considering the facts and legal precedents, allowed the waiver of the pre-deposit condition of the duty demand, interest, and penalty, finding in favor of the appellant due to the revenue-neutral nature of the excise duty paid on the final product and the acceptance of duty payments by the Department without protest.