2018 (12) TMI 491 - AT - Central Excise

Process amounting to manufacture or not - process of tinting i.e. mixing the base paint with the colourants to obtain the paint of desired shade - Held that - The issue has been decided in appellant own case M/S BERGER PAINTS INDIA LTD, PS CHOUDHARY VERSUS C.C.E. AHMEDABAD-I 2018 (6) TMI 1144 - CESTAT AHMEDABAD , where it was held that The appellant at the depot are carrying out the activities of tinting, i.e., mixing of base paints with colourants. Therefore, the said product is packed and sold to the dealer. The said activity is amount the manufacture by the fiction of the law as per section 2(f) (iii) of Central Excise Act, 1944. CENVAT Credit - Held that - The appellant is at liberty to submit the input credit documents to the Adjudicating Authority. If the appellant is able to establish with the documents as input invoices, receipt of goods, use of inputs etc. then the appellant will be eligible for Cenvat credit - matter on remand. Penalty on the employee of the Company - Held that - Penalty not imposable and is set aside. Appeal allowed in part and part matter on remand.

Summary

Issues involved: Determination of whether tinting process amounts to manufacture under Section 2(f)(iii) of Central Excise Act, 1944, availability of Cenvat credit, and imposition of penalty on the employee.

Analysis:

1. Manufacture of tinted paint: The main issue in this case was whether the tinting process, involving mixing base paint with colorants to achieve the desired shade, constitutes manufacturing under the Central Excise Act. The appellant argued that a previous Tribunal decision supported their position. However, the Tribunal, in the current judgment, upheld that the tinting activity does amount to manufacture based on a prior order. Consequently, the demand was deemed sustainable.

2. Eligibility of Cenvat credit: The appellant raised concerns regarding the availability of Cenvat credit, which had not been considered by the Adjudicating Authority. The Tribunal decided to remand this issue back to the Authority for reconsideration. The appellant was granted the opportunity to provide necessary documentation, such as input credit invoices and proof of input usage, to establish eligibility for Cenvat credit upon review by the Adjudicating Authority.

3. Penalty on the employee: Another aspect of the case involved the imposition of a penalty on an employee of the appellant. The Tribunal noted that in a previous judgment, a penalty on an employee was set aside. Following the same rationale, the penalty imposed on the employee in this case, Shri Abhijit Velhal, was also set aside. The Tribunal determined that, based on the circumstances, the penalty was not warranted.

In conclusion, the Tribunal allowed Appeal No. E/68/2010 and remanded Appeal No. E/61/2010 to the Adjudicating Authority for a reassessment of the Cenvat credit eligibility issue. The judgment provided clarity on the manufacturing status of the tinting process, the reconsideration of Cenvat credit availability, and the appropriate handling of penalties on employees in similar cases.