2015 (11) TMI 86 - AT - Central Excise

Availment of CENVAT Credit - returned goods - Activity amounts to Manufacture or not - held that - From the reading Rule 16, it is very clear that taking the status of supplier, even if it is presumed that the activity of supplier is not of manufacture but by virtue of above Rule 16, he was permitted to receive the duty paid goods and taken credit and in case the said duty paid goods after under going the process can be cleared on payment of duty i.e. in case of non-manufacture of activity, equal amount of Cenvat credit to be paid and in case of manufacture duty, transaction value to be paid in terms of Section 4 and as per explanation given in the said rule, duty so paid, that means in case of manufacture or non manufacturing activity, the recipient is entitle for availing the Cenvat credit on such duty. In view of the said provisions, it is absolutely clear that even if the activity of supply is not amount to manufacture but he has paid the said duty is available as Cenvat credit to the appellant. In view of my above discussion, I am of the view that the appellant is legally entitle for Cenvat credit in respect of laminated film received by them for packaging purpose. Therefore impugned order is set aside - Decided in favour of assessee.

Summary

Issues:
1. Denial of Cenvat credit on flexible laminated film purchased by the appellant.
2. Whether the lamination process amounts to manufacture under the Central Excise Act.
3. Admissibility of Cenvat credit based on duty paid by the supplier.

Analysis:
1. The appellant, a manufacturer of Snuff of Tobacco, availed Cenvat Credit on flexible laminated film purchased from a supplier. The Central Excise authorities issued a show cause notice questioning the availed credit, leading to an appeal before the Commissioner(Appeals) where the appellant's appeal was rejected. The appellant contended that they received the laminated film with duty paying invoices, and the duty paid by the supplier should allow them to claim the credit. The appellant argued that the supplier's duty payment was accepted by the Government, making the credit admissible. The appellant also cited precedents and Tribunal judgments supporting their claim for credit based on the duty paid by the supplier.

2. The Revenue argued that the lamination process did not amount to manufacture until a specific date, thus the duty paid by the supplier was not valid for claiming Cenvat credit. However, the Tribunal disagreed with the Revenue's stance, emphasizing that the lamination process was essential for packaging the final product, which aligned with a previous Tribunal judgment. The Tribunal highlighted that the duty payment by the supplier was in accordance with the Central Excise Act, making it valid for credit. The Tribunal also referenced Rule 16 of the Central Excise Rules, stating that even if the supplier's activity did not constitute manufacture, the appellant was entitled to Cenvat credit based on the duty paid by the supplier.

3. The Tribunal concluded that the appellant was legally entitled to Cenvat credit for the laminated film received for packaging purposes, setting aside the impugned order and allowing the appeal. The judgment highlighted the importance of the duty paid status of the inputs and the applicability of Rule 16 in allowing the credit based on the supplier's duty payment. The decision emphasized the recipient's right to claim credit even if the supplier's activity was not classified as manufacture, as long as the duty was paid and documented correctly.

This detailed analysis of the judgment showcases the legal intricacies surrounding the denial and subsequent allowance of Cenvat credit in the context of the lamination process and duty payment by the supplier, as deliberated by the Tribunal.