2013 (7) TMI 275 - AT - Central Excise

CENVAT Credit of Excise duty paid on batteries which supplied free of cost along with film roll - Appellant is re-packing and re-labelling the final product cleared by them i.e. film rolls along with the battery inside the pack of film roll. This particular activity as per the Chapter Note to Tariff Heading No.3702 would amount to manufacture Held that - Rule 3(1) of the Rules says that a manufacturer or producer of final product or a provider of taxable service shall be allowed to take credit of items mentioned therein - The word input is defined in Rule 2(k) which also includes accessories of the final products cleared along with final product Decided in favor of Assessee. Manufacture as defined under Section 2(f) of the Central Excise Act Held that - Any process in relation to the goods specified in the Third Schedule, which includes packing or re-packing of such goods in a unit container amounts to manufacture - Assessee would be entitled to claim cenvat credit on such input Decided in favor of Assessee.

Summary

Issues involved:
Denial of CENVAT Credit on excise duty paid on batteries supplied free of cost along with film roll.

Analysis:
The judgment by the Appellate Tribunal CESTAT AHMEDABAD pertains to two appeals challenging Order-in-Appeal No.SA/130/VAPI/2011 and No.SA/131/VAPI/2011. The central issue in this case revolves around the denial of CENVAT Credit on excise duty paid on batteries provided free of cost with film rolls. The lower authorities contended that the appellant was ineligible for the credit as batteries did not qualify as inputs under Rule 2(l) of CENVAT Credit Rules, 2004 for the manufacture of the final product. However, upon examination, it was observed that the appellant engaged in re-packing and re-labelling the final product, film rolls, along with batteries, which was considered a manufacturing activity under the Tariff Heading No. 3702. This activity was not disputed and was akin to the judgment of the Hon'ble High Court of Gujarat in the case of Prime Health Care Products 2011 (272) ELT 54 (Guj.).

The judgment delves into the interpretation of the CENVAT Credit Rules, 2004, specifically Rule 3(1), which allows manufacturers or producers to claim credit on specified items. It was noted that the definition of "input" under Rule 2(k) encompassed accessories of final products cleared along with the final product. The Tribunal justified that the credit was admissible for the respondent-assessee based on the excise duty paid on the toothbrush, which was packed with toothpaste without any additional charge to the consumer. This aligns with the provisions of Rule 3 and Section 2(f) of the Central Excise Act, 1944, which defines "manufacture" to include processes like packing or re-packing in a unit container. The packing and re-packing of inputs, such as toothbrush and toothpaste, were deemed to fall within the ambit of manufacture, enabling the assessee to claim CENVAT Credit on such inputs.

Given the clear alignment of the case with the precedent set by the Hon'ble High Court and the interpretation of relevant rules and definitions, the Tribunal concluded that no substantial question of law arose from the impugned order. Consequently, the Tribunal dismissed the appeal and set aside the impugned order, allowing the appeals in favor of the appellant. The judgment provides a comprehensive analysis of the legal framework, definitions, and precedents to support the decision to grant CENVAT Credit in the case under consideration.