2007 (11) TMI 67 - AT - Central Excise

Dept. found that cutting/slitting of aluminum foil is not manufacture Credit sought to be reversed Held that even if duty wasn t payable on final good (there being no manufacture), there was no question of recovery of credit, having been utilized towards payment of duty Assessee appeal allowed

Summary

Issues:
1. Whether the cutting and slitting of BOPP film amounts to "manufacture" for excise duty purposes.
2. Admissibility of CENVAT credit on inputs for payment of duty on final products.
3. Applicability of recent decisions on similar matters to the present case.
4. Validity of the Commissioner's decision confirming the demand for erroneously taken CENVAT credit.
5. Relevance of past tribunal decisions and Supreme Court judgments on similar issues.

Analysis:
1. The appellants were involved in cutting and slitting BOPP film into specific sizes. The department contended that this process did not amount to "manufacture" under Section 2(f) of the Central Excise Act, based on a previous apex court ruling. This led to a show-cause notice and the Commissioner's order demanding the reversal of CENVAT credit amounting to Rs.55,87,162.

2. The issue of admissibility of CENVAT credit on inputs for payment of duty on final products was crucial. The Tribunal referred to a recent decision in a similar case where the question of availing input-duty credit for payment of duty on final products was addressed. The Tribunal upheld the assessee's right to take CENVAT credit even if the final product was not excisable, citing past decisions and the acceptance of such credits by the Revenue.

3. The Tribunal relied on past decisions such as Super Forgings and Steels Ltd. Vs CCE Chennai to support the appellants' case. The Tribunal emphasized that once duty was paid on the final products, the CENVAT credit could not be denied, even if the final product was not excisable.

4. The appellants' counsel also cited relevant decisions like Rico Auto Industries Ltd. Vs CCE New Delhi and Shivali Udyog (I) Ltd. Vs CCE Raipur to strengthen their argument. These cases highlighted instances where duty was paid on final products using CENVAT credit on inputs, leading to a favorable outcome for the assessee.

5. Ultimately, the Tribunal ruled in favor of the appellants, setting aside the impugned order. The decision was based on the precedents, past tribunal decisions, and the principle that once duty was paid on final products, the denial of CENVAT credit was not justified.