2016 (6) TMI 1055 - AT - Central Excise

Cenvat Credit - inupts used for manufacture of printed laminated sheets - Some of these printed laminated wrappers are consumed by the appellants captively and some produce is cleared to the contract manufacturing units of the appellant on payment of excise duty. - The Revenue was of the view that since the printing and laminating of a plain Polyester film does not amount to manufacture, no excise duty was payable on the printed wrappers cleared by the appellant to their contract manufacturing units. - Therefore, the appellant is not entitled to take credit. On the basis, the cenvat credit availed in respect of BOPP film, polyester film and other inputs used in making printed laminated sheets was sought to be recovered alongwith the interest by way of issue of a shoe cause notice. Held that - the appellant after printing and laminating the wrappers are to be used packing the biscuits manufactured by the appellant only - the activity of printing/laminating of BOPP films which were used as laminated wrapper for packing of biscuits by the appellant shall amount to manufacture. Therefore, the appellant has rightly availed the credit on BOPP films and other inputs used in making printed laminated sheets. In these circumstances, the appellant has correctly taken the credit. - Demand set aside - Decided in favor of assessee.

Summary

Issues:
1. Whether the activity of printing and laminating of a plain polyester film amounts to manufacture?
2. Whether the printing/laminating of BOPP films used as laminated wrappers for packing biscuits constitutes manufacture?

Analysis:

Issue 1:
The appeal revolved around the question of whether the printing and laminating of a plain polyester film by the appellant constituted manufacturing. The Revenue contended that since this process did not amount to manufacture, no excise duty was payable on the printed wrappers supplied to contract manufacturing units. The appellant argued that based on a Supreme Court decision and precedents, the activity should be considered as manufacturing. The Tribunal analyzed the facts and held that the printing/laminating of BOPP films for packing biscuits did indeed amount to manufacture. Consequently, the appellant was entitled to avail credit on inputs used for the process, and the impugned proceedings were deemed unwarranted.

Issue 2:
Drawing parallels from a similar case before the apex court involving the printing of GI paper, the Tribunal examined whether the printing/laminating of BOPP films as wrappers for biscuits constituted manufacture. The apex court had outlined four categories to determine if a process amounts to manufacturing. Upon scrutiny, the Tribunal found that the printing process transformed the paper into a product with distinct character and use, making it marketable for a specific purpose. Therefore, the Tribunal concluded that the printing/laminating activity in question fell under the category where manufacturing of goods could be said to take place. Consequently, the appellant's credit on inputs used in the process was deemed valid, leading to the setting aside of the impugned order and allowing the appeal with any consequential relief.

This comprehensive analysis of the judgment highlights the key legal issues, arguments presented by both sides, relevant legal precedents, and the Tribunal's detailed reasoning leading to the final decision in favor of the appellant.