2014 (8) TMI 82 - AT - Central Excise

Cenvat Credit - Manufacture activity or not - activity of packing, labeling, etc. undertaken by the appellant on the various chemicals - Held that - It is not in dispute that the appellant discharged duty liability on the activity undertaken by him by treating it as manufacture and the payment of duty so made was more than the amount of credit taken on the various inputs - in view of the decision of the Hon ble Apex Court in the case of Narmada Chematur Pharmaceuticals Ltd. (2004 (12) TMI 93 - SUPREME COURT OF INDIA), since the amount of duty paid is more than the credit taken, the same would tantamount to reversal of credit.

Summary

Issues:
- Duty demand confirmation against two companies for labeling activities not amounting to manufacture.
- Appellant's argument of duty payment exceeding credit taken, leading to reversal of credit.
- Revenue's contention that labeling does not constitute manufacture, hence no duty or credit implications.

Analysis:
1. The appeals challenged the Order-in-Original confirming duty demands against the companies for undertaking labeling activities that were deemed not amounting to manufacture. The adjudicating authority upheld the duty demands and imposed penalties based on the labeling activities not qualifying as manufacturing processes, thus questioning the availed Cenvat Credit on inputs used for labeling.

2. The appellant argued that despite the labeling activities not meeting the manufacturing criteria, they had paid duty exceeding the credit taken, resulting in credit reversal. Citing legal precedents like the Narmada Chematur case and decisions by the Tribunal, the appellant contended that if duty payment surpasses credit availed, no credit reversal is necessary. Therefore, the appellant sought relief from the impugned demands.

3. The Revenue, represented by the Commissioner (AR), reiterated the adjudicating authority's stance, emphasizing that labeling alone does not constitute manufacturing. Consequently, the Revenue maintained that no duty payment or credit availing arises from non-manufacturing activities like labeling, supporting the validity of the original order.

4. Upon careful consideration, the Tribunal acknowledged the appellant's payment of duty exceeding the credit taken for labeling activities, aligning with the legal principle established in the Narmada Chematur case. The Tribunal ruled that since duty payment exceeded credit utilization, it effectively amounted to credit reversal, obviating the need for additional credit payments. Consequently, the Tribunal set aside the impugned orders and allowed the appeals, emphasizing the legality of the appellant's position based on the duty payment exceeding credit utilization.