2016 (8) TMI 1019 - AT - Central Excise

Cenvat Credit - Job Work - whether Kraft paper is to be considered as final product or as an input / intermediate product to be sent on job work under Cenvat Rule 4(5) for further manufacture of finished products - Held that - it is not in dispute that kraft paper manufactured by the respondent in his factory is proposed to be sent to job worker for conversion to carton boxes etc. Hence the final product of this scheme would be the cartons etc. and obviously the kraft paper is the input. Under the circumstances, we approve the view taken by the Commissioner (Appeals) and the permission granted under Cenvat Rules 4(5) and 4(6) subject to the usual procedure to be followed. - Decided against the Revenue

Summary

Issues Involved:
Categorization of "kraft paper" as a final product or an input/intermediate product under Cenvat Rule 4(5) for further manufacture of finished products.

Analysis:

Issue 1: Categorization of "kraft paper"

The crux of the matter in this case revolves around the categorization of "kraft paper" as either a final product or an input/intermediate product for further processing under Cenvat Rule 4(5). The respondent, engaged in manufacturing kraft paper and related articles, sought permission to send the manufactured kraft paper to a job worker for conversion into carton boxes and other packing materials. The original authority denied this permission, arguing that kraft paper, being a final product, cannot be sent for further processing. However, on appeal, the Commissioner (Appeals) granted permission, considering kraft paper as an input for the production of cartons and related products. The Tribunal concurred with the Commissioner's view, emphasizing that the final product of the process would be the cartons, not the kraft paper itself. Therefore, the Tribunal upheld the permission granted under Cenvat Rules 4(5) and 4(6), subject to compliance with prescribed procedures.

Issue 2: Precedent and Tribunal's Decision

In support of its decision, the Tribunal referenced a similar case where a comparable interpretation was made regarding the treatment of kraft paper as an input for further manufacturing processes. The Tribunal highlighted that the kraft paper, in this scenario, serves as a raw material for the production of cartons and other finished goods, reinforcing the notion that it should be considered an input rather than a final product. Drawing parallels with the precedent case, the Tribunal affirmed the Commissioner's decision and dismissed the Revenue's appeal. By aligning with established interpretations and consistent legal principles, the Tribunal reinforced the understanding that kraft paper, in the context of this case, qualifies as an input material eligible for processing under Cenvat Rules.

In conclusion, the Tribunal's judgment clarifies the categorization of "kraft paper" as an input material for further manufacturing processes, rejecting the Revenue's appeal and upholding the permission granted by the Commissioner (Appeals). The decision underscores the importance of correctly identifying materials within the framework of Cenvat Rules to facilitate smooth processing and compliance with regulatory requirements.