2016 (8) TMI 485 - AT - Central Excise

Benefit of exemption of duty - Notification No. 01/2011-CE dated 01/03/2011 - Instant food mixes - Appellant manufacturing two category of goods namely packing material (printed laminated /metalized film and pouches) and Instant Food Mixes, Ready to Eat Food Product, etc. - Held that - the appellants are not claiming any CENVAT credit for the inputs used in the manufacture of second category of goods (Instant Food Mixes, ready to eat food product etc.), so the appellants would be entitled to the benefit of Notification No. 01/2011-CE dated 01.03.2011. It is to be noted that the appellants have not taken any CENVAT credit for any of inputs including the input of packing material (printed laminated /metalised film and pouches) in respect of manufacture of Instant Food Mixes, ready to eat food, etc. Commissioner of Central Excise, when deciding the SCN issued to the appellants has not rightly appreciated the facts on the ground. There has been misconstruction on the part of Commissioner deciding the SCN notice, when he wrongly linked the CENVAT credit taken on the inputs for manufacture of packing material (printed laminated /metalized film and pouches), which actually is a different product altogether and has no direct link with the product, instant food mixes, etc. It is to be noted that the appellants are paying full duty on the manufacture of other product namely packing material falling chapter 39. CENVAT credit taken in case of inputs, for the manufacture of packing material (Chapter 39) can t be wrongly linked with the manufacture of another category of goods namely Instant Food Mixes, Ready-to-eat food product, etc. - Decided in favour of appellant with consequential relief

Summary

Issues:
1. Whether the appellants are entitled to the benefit of Notification No. 01/2011-CE dated 01.03.2011 for their manufactured goods.
2. Whether the CENVAT credit availed on materials used for manufacturing packing materials should be considered as utilization of credit on inputs for food products.
3. Whether the appellants have correctly claimed the benefit of the Notification based on their CENVAT credit utilization.

Analysis:

Issue 1:
The Central Excise department initiated proceedings to deny the benefit of duty exemption under Notification No. 01/2011-CE dated 01/03/2011 to the appellants, resulting in a differential duty demand and imposition of a penalty. However, the Tribunal granted waiver of pre-deposit and Stay against recovery to the appellants.

Issue 2:
The Tribunal examined that the appellants manufacture two categories of goods: packing material and Instant Food Mixes, Ready to Eat Food Products. It was found that the appellants were not availing CENVAT credit for the duties paid on the packing material used as inputs for food products. The Tribunal referred to legal precedents to establish that the appellants, by not claiming CENVAT credit for inputs used in food products, were entitled to the benefit of the Notification.

Issue 3:
The appellants successfully argued that they were legally entitled to claim the benefit of Notification No. 01/2011-CE dated 01.03.2011. The Tribunal noted that the Commissioner had misconstrued the facts by linking the CENVAT credit taken on inputs for packing material with the manufacture of food products. The Tribunal cited previous decisions to support the appellants' claim and concluded that they are entitled to the benefit of the Notification. The appeal was allowed with consequential benefits.

In conclusion, the Tribunal ruled in favor of the appellants, allowing their appeal and granting them the benefit of Notification No. 01/2011-CE dated 01.03.2011. The judgment highlighted the importance of correctly interpreting CENVAT credit utilization and ensuring that such credits are not wrongly linked between different categories of manufactured goods.