2015 (10) TMI 1942 - AT - Central Excise

Denial of CENVAT Credit - Manufacture - Held that - It is a case where relying on the Meltex (I) P. Ltd. (2004 (2) TMI 387 - SUPREME COURT OF INDIA), it was held that the activity undertaken by the respondent does not amount to manufacture. Therefore, impugned proceedings have taken place. It is not in doubt that the respondent has cleared the goods after processing of the inputs on payment of duty. Therefore, relying on Ajinkya Enterprises - 2013 (6) TMI 610 - CESTAT MUMBAI , which has been affirmed by the Hon ble High Court in 2012 (7) TMI 141 - BOMBAY HIGH COURT wherein it was held that if duty has been paid on clearances if activity does not amount to manufacture, the duty paid shall amount to reversal of Cenvat credit availed on the inputs. Therefore, in this case also, duty has been paid on the clearances; therefore, respondents are entitled to take Cenvat credit. - No infirmity in impugned order - Decided against revenue.

Summary

Issues:
- Appeal against order setting aside adjudication
- Entitlement to Cenvat credit on laminated plastic film
- Whether laminating/metalizing amounts to manufacture
- Duty paid on clearances and Cenvat credit availed

Analysis:
The appeal was filed by the Revenue against an order where the Commissioner (Appeals) set aside the order of adjudication. The case revolved around the respondents, manufacturers of laminated plastic film, and the question of their entitlement to Cenvat credit on these films. The Revenue contended that laminating/metalizing of duty paid film does not amount to manufacture, citing the Meltex (I) P. Ltd. case. A show cause notice was issued to deny Cenvat credit on the films. The Adjudicating Authority confirmed the demand, but the Commissioner (Appeals) overturned this decision, stating that since the respondents had paid duty on their clearances, it was a revenue-neutral exercise and the demand was not sustainable.

During the proceedings, it was established that the activity undertaken by the respondent did not amount to manufacture, as per the Meltex (I) P. Ltd. case. However, it was noted that the respondents had cleared the goods after processing the inputs and paying duty. Citing the Ajinkya Enterprises case, it was highlighted that if duty has been paid on clearances even if the activity does not amount to manufacture, the duty paid would result in the reversal of Cenvat credit availed on the inputs. Therefore, since duty had been paid on the clearances in this case, the respondents were deemed entitled to take Cenvat credit.

The judgment upheld the impugned order, stating that since duty had been paid on the clearances, the respondents were entitled to Cenvat credit. The appeal of the Revenue was dismissed, and the cross objection was also disposed of. The decision was made based on the precedent set by the Ajinkya Enterprises case and the principle that duty paid on clearances, even if the activity does not constitute manufacture, allows for the availing of Cenvat credit.